Japanese Companies in the U.S.

CHEMICALS

More than in any other industry, the rapid spread of
business-to-business electronic commerce, particularly the advent of
industrywide Internet exchanges, affects the core operations of
Japan's giant trading companies. However, they have been fairly quick
to recognize the cost advantages, efficiency benefits and
market-reach opportunities that the B2B model delivers. For instance,
four of the five biggest traders  MARUBENI CORP., MITSUBISHI
CORP., MITSUI & CO., LTD. and SUMITOMO CORP.  have invested
in CHEMCONNECT INC. The San Francisco company runs the World Chemical
Exchange, the largest on-line marketplace for chemicals and plastics
of all kinds. Operational since July 1999, the ChemConnect exchange
is an open, neutral marketplace where members can find trading
partners, negotiate pricing and complete transactions on-line around
the clock. They also have real-time access to supply and demand
information and other industry news. The four trading companies,
which all have significant chemicals and plastics businesses, join
more than 5,000 World Chemical Exchange members, including such
manufacturers as BASF AG, BP AMOCO CHEMICALS P.L.C., DOW CHEMICAL
CO., EASTMAN CHEMICAL CO., GENERAL ELECTRIC CO.'s GE Plastics and PPG
INDUSTRIES, INC.

The Pasadena, Texas unit of NISSAN CHEMICAL INDUSTRIES, LTD.
 which has made organosilicasol, an organic solvent used as an
additive in hardeners and anticorrosion agents as well as in
polyester resins, since the latter part of 1997  is expanding
into a polishing agent for silicon wafers known as Snowtex. The
company has designated roughly $9.2 million for a second plant that
should be completed in 2001. Production of Snowtex, a colloidal
silica sol consisting of microfine particles of silicon dioxide
dispersed in water that can be used in a variety of applications,
should add $27.5 million to NISSAN CHEMICAL HOUSTON CORP.'s annual
revenues. It also could lead to the tripling of the company's work
force to 30 people. Nissan Chemical decided to add Snowtex to its
affiliate's product line because of expanding demand for the
polishing agent from chipmakers operating in the United States.

A compound discovered by ASAHI CHEMICAL INDUSTRY CO., LTD. that
shows promise in the treatment of obesity and diabetes will be
exclusively developed, commercialized and sold outside East Asia by
SMITHKLINE BEECHAM PLC. AZ40140 is a Beta-3 receptor agonist that
breaks down fat in the body and promotes insulin production.
Philadelphia's SB expects to begin clinical testing of AZ40140 in the
United States later this year, focusing on the benefits of the drug
for obesity. It will make milestone payments to Asahi Chemical during
development and pay royalties on sales. In Japan and in neighboring
countries, the Japanese company and its partner will jointly
commercialize AZ40140. As part of the agreement, Asahi Chemical will
codistribute in Japan SB's Avandia (rosiglitazone maleate), a
treatment for Type II, or adult- onset, diabetes. That product is in
Phase II clinical testing there.

SANKYO CO., LTD. will fund for another year, or until May 2001,
work with METABASIS THERAPEUTICS, INC. on a new therapy for the
treatment of Type II diabetes. Their collaboration, initiated in
1997, is based on the San Diego, California biopharmaceutical
company's discovery of a series of potent and selective inhibitors of
the gluconeogenesis pathway, which is responsible for the abnormal
overproduction of glucose in the liver of patients with Type II
diabetes. The partners believe that gluconeogenesis inhibitors will
be effective in people who are both early- and late-stage diabetics,
whether used alone or in combination with other diabetes drugs. The
latter includes the class of drugs known as insulin sensitizers, such
as Sankyo's Rezulin (troglitazone). Metabasis hopes to begin clinical
evaluation later this year of the first diabetes drug developed under
its pact with Japan's number-two drug firm.

In follow-on work, PROTEIN DESIGN LABS, INC. will humanize for
FUJISAWA PHARMACEUTICAL CO., LTD. an antibody for the treatment of
inflammatory and immunologically mediated conditions. Under the
original July 1999 arrangement, the Fremont, California specialist in
the development of humanized antibodies modified certain Fujisawa
Pharmaceutical antibodies. The Japanese company will make an up-
front payment of $1.5 million to Protein Design Labs as well as fund
its research program.

The national rollout by WARNER-LAMBERT CO. of Benadryl
Allergy/Cold FASTMELT tablets represents the launch in North America
of YAMANOUCHI PHARMA TECHNOLOGIES, INC.'s WOWTAB quick- dissolving,
without-water dosage form. The Palo Alto, California firm is in
charge of the worldwide commercialization and introduction of
specialized drug-deliv-ery technologies for parent YAMANOUCHI
PHARMACEUTICAL CO., LTD. (see
Japan-U.S. Business Report
No. 364, January 2000, p. 2). To date, nine
prescription WOWTAB products have been released in Japan.

COMPUTERS AND PERIPHERALS

Another new benchmark has been established in mainframe
processing. HITACHI DATA SYSTEMS CORP.'s System 390-compatible
Skyline Trinium Nine Series can support as many as 16 processors,
each of which is capable of processing 262 million instructions per
second. A fully configured Trinium Nine can crunch nearly 3,000 MIPS,
or nearly twice the 1,600 MIPs delivered by reigning champion
INTERNATIONAL BUSINESS MACHINES CORP.'s 12-processor Generation 6
mainframe system. HITACHI, LTD. hopes that the availability of the
Trinium Nine, which can scale from a two-processor system all the way
up to 16 processors, will reverse a precipitous two-year slide in its
share of the S/390 mainframe or enterprise server market. The Trinium
Nine was scheduled for release last fall. Instead, however, Santa
Clara, California-based HDS introduced the 12-processor Trinium Eight
Series (see Japan-U.S. Business
Report No. 362, November 1999, p. 3). Although
incredibly fast, these machines still allowed IBM to expand sales to
financial, communications and other companies looking for bulk
capacity to support their e-business activities.

All future Express5800 server, PowerMate desktop and Versa
notebook models will be available with MICROSOFT CORP.'s Windows 2000
operating system, NEC COMPUTERS, INC. announced. The Windows 2000
family includes Windows 2000 Professional for desktop and notebook
computers and Windows 2000 Server and Windows 2000 Advanced Server.

A year after releasing what it calls a microdesktop for
space-constrained settings like call centers, NEC COMPUTERS, INC.
introduced the PowerMate 2000. Powered by a 500-MHz Pentium III
processor, the build-to-order system offers 64 megabytes or 128 MB of
DRAM (dynamic random access memory), upgradable to 256 MB of 100-MHz
synchronous DRAM, 6 gigabytes or 12 GB of hard-drive capacity, a 24X
compact disc-read-only memory drive, a floppy disk drive, built-in
10/100 Ethernet support, two Type II CardBus PC Card slots and a like
number of USB (universal serial bus) connections. Included in the
estimated $2,500 price of the base model is a 15-inch TFT
(thin-film-transistor) liquid crystal display monitor with a XGA
(extended graphics array) resolution of 1024 x 768 pixels.

Still a relative newcomer to the extremely competitive American
corporate desktop personal computer market, TOSHIBA AMERICA
INFORMATION SYSTEMS, INC.'s Computer Systems Group is trying to carve
out a niche for its Equium line by emphasizing the lower total cost
of ownership that this state-of-the-art equipment can deliver. The
latest series is the scalable Equium 7350 platform, which supports
Intel processors ranging from a 433-MHz Celeron all the way up to a
733-MHz Pentium III and features Intel's 810e chipset with integrated
graphics. An Equium 7350 powered by a Celeron processor starts at
less than $750, while a system built around the performance-oriented
733-MHz Pentium III costs as little as $1,250.

In the notebook computer market, however, TOSHIBA AMERICA
INFORMATION SYSTEMS, INC. CSG ranks as number one. To maintain that
standing, the Irvine, California company has several new models in
its various lines. In what is known as the desktop replacement
segment, TAIS introduced the Satellite Pro 4200 series for small and
midsize business customers interested in performance and multimedia
capabilities. The Satellite Pro 4280ZDVD and the Satellite Pro
4280XDVD share a 500-MHz mobile Pentium III processor, 64 MB of SDRAM
expandable to 320 MB, a slim, all-in-one drive design including a
6-GB hard drive, a 6X digital video disc-ROM drive and a floppy
drive, and a USB port and two Type II or one Type III CardBus PC Card
slots. The only difference between the two is the size of the TFT LCD
display: 15 inches for the Satellite Pro 4280ZDVD, which costs about
$2,900 with Windows 2000 Professional, and 14.1 inches for the $2,700
Windows 2000-compatible Satellite Pro 4280XDVD.

For business buyers that want increased performance and enhanced
multimedia options but at a lower price, TOSHIBA AMERICA INFORMATION
SYSTEMS, INC. CSG introduced the Satellite 2675DVD and the Satellite
2715XDVD. The latter pairs a 500-MHz mobile Pentium III processor
with a 14.1-inch TFT LCD display for $2,400, while the former, which
lists for $2,000, offers a 450-MHz mobile Pentium III processor and a
12.1-inch TFT LCD display. Common features include 64 MB of SDRAM
system memory expandable to 192 MB, a combination 6-GB hard drive/4X
DVD-ROM drive/floppy drive and one-touch Internet access.

TOSHIBA AMERICA INFORMATION SYSTEMS, INC. also continues to cater
to budget-conscious business customers, offering them two more
choices. Just $1,300 will buy the Satellite 2140XCDS with a 450-MHz
AMD-K6-2 processor and a 13-inch Color Bright dual-scan display,
while $1,600 will enable the buyer to upgrade to the Satellite
2180CDT's 475-MHz version of the processor and a 12.1-inch TFT LCD
display. Both machines come with 64 MB of SDRAM, an integrated 4.3-GB
hard drive/24X CD-ROM drive/floppy drive, a USB port and two Type II
or one Type III CardBus PC Card slots.

The Windows 2000 Professional operating system also is shipping
with three high-performance notebook models from SONY ELECTRONICS,
INC. The VAIO PCG-F490K is the firm's equivalent of a desktop, made
possible by a 650-MHz mobile Pentium III processor with SpeedStep
technology, 128 MB of SDRAM and an 18-GB hard drive. Only slightly
lower on the performance scale but $500 cheaper at $3,500 is the VAIO
PCG-F480K, which uses a 600-MHz version of the mobile Pentium III
with SpeedStep technology and features 64 MB of SDRAM standard and a
12-GB hard drive. Both models have a 15-inch XGA TFT LCD display and
a 4X DVD-ROM drive with DVD movie playback capability. The other Sony
Electronics' model using the new operating system is the VAIO
PCG-Z505HSK SuperSlim Pro, which is just an inch thick and weighs
less than 4 pounds. This design does not sacrifice performance,
delivered via a 500-MHz mobile Pentium III, 128 MB of SDRAM and a
12-GB hard drive to a 12.1-inch XGA TFT LCD display. It lists at
$3,200.

SONY ELECTRONICS, INC. has two other additions to its VAIO 505
SuperSlim Pro notebook line. The $2,500 VAIO PCG-Z505HE draws power
from a 450-MHz mobile Pentium III engine and comes with 64 MB of
SDRAM, 8.1 GB of hard-drive capacity and a 12.1-inch XGA TFT LCD
display. For about $3,000, the cost of the VAIO PCG-Z505HS, buyers
can get a 500-MHz mobile Pentium III chip, 128 MB of memory and a
12-GB hard drive, plus the same display as its mate. Both models also
include the innovations that have made the VAIO line so attractive to
multimedia enthusiasts, such as an iLINK (IEEE 1394) digital
interface, a dedicated Memory Stick media slot for quick storage of
graphics from cameras, DVgate Motion and Still Image Capture
software, and PictureGear software.

The small to midsize business customer or SOHO (small office/home
office) user who wants high- performance computing capabilities and
the multimedia functionality available in the VAIO line but at a
lower price, SONY ELECTRONICS, INC. introduced the VAIO PCG-F420
notebook. The estimated price of $1,700 buys a machine with a 450-MHz
mobile Pentium III processor, 64 MB of SDRAM main memory, a 6-GB hard
drive, a 4X DVD-ROM drive and a 13-inch display with a SVGA (super
video graphics array) resolution of 800 x 600 pixels, plus the VAIO
line's noted multimedia and PC networking software and an iLINK port.

FUJITSU PC CORP. has brought the advantages of the Microsoft 2000
Professional operating system to two of its notebook families. Four
models in its mainstream LifeBook E Series of business machines have
this capability. They are powered by either a 450-MHz mobile Celeron
chip or a 450-MHz, 500-MHz or 650- MHz mobile Pentium III processor,
the latter featuring SpeedStep technology. All come with 64 MB or 128
MB of SDRAM standard, a 6-GB, 9-GB or 12-GB hard drive, a flexible
bay for a modular CD-ROM, CD- ReWritable or DVD drive, and a
14.1-inch TFT LCD display. Support for a wireless infrared mouse and
a security panel are new features of the LifeBook E Series models,
which start at $2,000. Customers also can choose Windows 2000
Professional on the relatively new LifeBook S Series, a line of
ultrathin (about 1 inch) models that weigh less than 4 pounds with
their lithium-ion battery. The new system uses a 400- MHz mobile
Pentium III processor and provides 64 MB of internal memory, a 6-GB
hard drive, an internal flexible bay and a 12.1-inch SVGA TFT LCD
display. The LifeBook Application Panel, which has four programmable
buttons for launching e-mail and/or software applications, is
included in the LifeBook S Series' starting price of $2,300.

The 36-GB disk drives installed in HITACHI DA-TA SYSTEMS CORP.'s
Hitachi Freedom Storage 5800 midrange storage subsystem now spin at
10,000 rotations per second. The company calculates that the new
drives can improve read performance in transaction-oriented
applications by as much as 40 percent compared with the
industry-standard 7,200-rpm speed of the previous generation of HDS
36-GB drives. Fully configured, the Freedom Storage 5800, which works
with a variety of Unix, Windows NT and Windows 2000 servers, can
provide more than 2.5 terabytes of storage capacity in a single
19-inch rack.

For its part, FUJITSU COMPUTER PRODUCTS OF AMERICA, INC. is
sampling a line of 10.2-GB-per- platter drives for desktop PCs that
spin at 7,200 rpm and feature FUJITSU, LTD.'s new "silent" drive
technology. Available in capacities of 10.2 GB, 15.3 GB and 20.4 GB,
the high-performance MPF3xxxAH drives have a data transfer rate of
53.9 MB per second and a seek time of 8.5 milliseconds.

Given the interest in its initial CD-ReWritable disc drives, the
Disc, Media and Systems Center affiliate of RICOH CO., LTD.
introduced the higher-performance Ricoh MediaMaster MP7080 series for
home users. The $240 unit combines a 8X CD-Recordable write speed and
a 4X CD-RW drive with a 32X CD-ROM read capability. .....The Tustin,
California-based unit of RICOH CO., LTD. also released
ultrahigh-speed 12X media to support the first 12X CD-Recorders. The
American-made multispeed Ricoh Platinum CD-R disc delivers 700 MB of
storage or approximately 80 minutes of audio recording, plus a write
speed that is as much as 33 percent faster than Ricoh's current 8X
maximum discs. Equally important, Ricoh Platinum media is optimized
for 1X, 2X, 4X, 6X, 8X and 12X recording. The lower speeds permit
high-quality audio recordings, while the faster speeds are geared to
large storage applications. A 25-disc pack costs less than $40.

Big ink-jet printer manufacturer SEIKO EPSON CORP. claims to be
the first company to introduce a line of printers that can output
photographic prints that rival those from commercial photo labs in
terms of both quality and longevity. Breakthroughs in fade resistance
are key to these claims. The EPSON Stylus Photo 870, EPSON Stylus
Photo 875DC and EPSON Stylus Photo 1270, which come standard with new
EPSON Photo Inks, also are said to deliver the first continuous
edge-to-edge 4 x 6-inch snapshot printing system. Designed for both
amateurs and professionals, the three machines range in price from
$300 to $500.

ELECTRIC MACHINERY

NIPPON CHEMI-CON CORP. is building a development center in
suburban Chicago to bolster its standing as the largest maker and
supplier of aluminum electrolytic capacitors in North America. The
initial man-date for the $1.8 million facility, which should be
operational in April with a staff of eight people, is to work on
capacitors for use in hybrid and electric vehicles. Other, more
medium-term objectives for the Chemi-Con Laboratory are to research
large capacitors for such applications as trains as well as to
develop small, lightweight capacitors. UNITED CHEMI-CON, INC., NCC's
North American sales and engineering unit, is headquartered in
Rosemont, Illinois. In addition to sales, service and
field-engineering support personnel located around the country,
United Chemi-Con has warehouses in Brea, California and Lansing,
North Carolina. The latter is the site of its onshore aluminum
electrolytic capacitor factory, which was acquired in the fall of
1992.

Ownership of another early Japanese factory in the United States
is changing hands as a result of the corporate restructuring underway
at home. PIONEER CORP. has decided to sell the DVD production assets
of its PIONEER VIDEO MANUFACTURING, INC. subsidiary in Carson,
California to DELUXE VIDEO SERVICES INC. With the sale of the plant's
four DVD manufacturing lines and related equipment for what industry
sources estimate was between $36.7 million and $45.9 million, Pioneer
expects to improve economies of scale by consolidating most of its
DVD production in Japan. The company acquired the renamed PVM in
1982. Its work force of some 160 people currently turns out about
100,000 DVDs a month. Deluxe Video, a subsidiary of RANK GROUP PLC,
is a major supplier of VHS duplication, packaging and fulfillment
services worldwide.

In a move designed to save both time and money, SONY CORP.
reportedly will integrate the digital television research and
development activities it now performs separately in Japan and at the
Sony Technology Center at the company's huge production complex in
San Diego, California. Among the areas apparently targeted for
collaborative work, which will be handled via the Internet, are
digital signal processor chips, decoders and software. The goal is to
develop digital TV sets for release in Japan and the United States
based on common specifications.

Computer, electronics and automotive companies around the world
are quickly lining up to license SONY CORP.'s Memory Stick technology
 a compact, stick-shaped recording media based on rewritable
flash memory technology. Among the 46 companies interested in
commercializing Memory Stick-compliant products are ADOBE SYSTEMS,
INC., COMPAQ COMPUTER CORP., GENERAL MOTORS CORP. and TEXAS
INSTRUMENTS INC. Memory Stick media now is available in storage
capacities of 4 MB, 8 MB, 16 MB, 32 MB and 64 MB. A 256-MB product is
slated for introduction in 2001.

ENERGY RESOURCES

The dismantling of big independent power producer and electricity
wholesaler SITHE ENERGIES INC. is underway (see
Japan-U.S. Business Report
No. 362, November 1999, p. 7). The New York City
company's majority owner, France's VIVENDI, and MARUBENI CORP., which
has a 30 percent stake in the firm, have agreed to sell 21 power
plants located in Pennsylvania, New Jersey and Maryland to Houston's
RELIANT ENERGY for $2.1 billion in cash. With a net generating
capacity of 4,276 megawatts, these facilities represent about a third
of Sithe's operational capacity. The big trading company reportedly
netted some $600 million on the sale. Vivendi and Marubeni continue
to search for buyers for Sithe's other generating plants.

Building on a 1992 information-sharing arrangement, CHUBU ELECTRIC
POWER CO., INC. and CONSUMERS ENERGY, a CMS ENERGY CORP. subsidiary,
have agreed to form a purchasing alliance. Japan's third-largest
electric utility and Jackson, Michigan-headquartered Consumers
Energy, which ranks fourth in the United States among combined
natural gas and electric utilities, see the tie-up as a way to gain
leverage in purchasing materials for their operations. Before details
of the alliance are finalized, representatives of the two companies
will examine product cost, product standardization, new product
development, electronic technology, resource and knowledge sharing,
and procurement process improvement and streamlining.

FINANCIAL SERVICES

The first nationally chartered Internet bank, Houston-based
COMPUBANK, N.A., raised $36 million in its initial round of
institutional financing. SOFTBANK FINANCE CORP. led the fund-raising,
in which three major U.S. financial services providers also
participated. Year-old CompuBank offers the same variety of
depositary products and services to businesses and consumers that
conventional brick-and-mortar banks do, plus the convenience of
on-line banking and the higher interest rates on deposits and lower
fee charges made possible by the absence of a physical presence. The
Internet bank will use the money raised to expand its customer base
as well as operations and to build up its capital.

One of the start-ups attempting to use the Internet to democratize
investment banking by making initial public offerings and similar
investments accessible to individual investors has caught the eye of
another SOFTBANK CORP. affiliate. SOFTBANK VENTURE CAPITAL joined a
number of other name venture capital firms in raising $52 million in
follow-on financing for E*OFFERING CORP. of San Francisco. E*TRADE
GROUP, INC., an initial investor in the 13-month-old business and
another company in which Softbank has a stake, also invested. Along
with partner E*TRADE, E*OFFERING participated in 47 public offerings
in last year's fourth quarter alone. It will use the new capital
mainly to expand its on-line products and to continue the development
of its technology infrastructure.

SOFTBANK FINANCE CORP. agreed to help raise as much as $100
million for TRADESCAPE.COM, INC., a provider of so-called active
stock trading systems for professional traders, institutions and
active on-line investors that is in the process of acquiring
MARKETXT, INC. Backed by a number of big brokerage houses, the latter
organization is a recently authorized ECN (electronic communications
network) that offers extended-hours trading for individual investors.
New York City-based TRADESCAPE.com, in which Softbank Finance already
is the largest investor, sees the combination as critical to
maintaining its position as the leading provider of alternative
trading systems for all equity market participants. Through its
trading platform, registered broker/dealer subsidiary and third-party
licensing arrangements, TRADESCAPE.com executed more than 150,000
trades a day with a volume in excess of 40 million shares in
December. It will use the money from Softbank Finance and other
investors to accelerate growth into the active on-line and
institutional markets and for further technology development.

Continuing to build a name for itself as a venture capitalist,
HIKARI TSUSHIN, INC. was one of a number of new institutional or
private investors that joined previous investors in raising $27
million for GARAGE.- COM. The Palo Alto, California firm helps
promising early-stage entrepreneurial businesses find financial
backers in the venture-capital, corporate and "angel" investor
communities. By its count, Garage.com has been instrumental since the
start of 1999 in generating more than $100 million for 40 technology
start-ups through its wholly owned broker/dealer subsidiary.

To facilitate its search for possible partners among the vast
number of U.S. start-ups in the information technology field, NTT
COMMUNICATIONWARE CORP., the software development unit of NIPPON
TELEGRAPH AND TELEPHONE CORP., invested $5 million in the just-closed
Bay III fund. Run by BAY PARTNERS, the $200 million Bay III fund is
the Cupertino, California firm's newest early-stage venture-in-
vestment fund. On average, Bay Partners invests between $2 million
and $3 million in entrepreneurial firms ready to bring their ideas to
the market. Like similar operations, it also provides strategic
consulting, mentoring, executive search and financial planning
advice.

Trader NISSHO IWAI CORP. is an established investor in
up-and-coming American IT firms through a unit of its main New York
City subsidiary. However, it decided to sharpen the focus of these
activities by forming GLOBE LINQ, LLC as an independent business unit
of its affiliate. The new company has approximately $30 million at
its disposal. Like other venture-capital firms, it provides not only
financing to promising start-ups but also managerial and operational
support. What sets Globe LinQ apart, Nissho Iwai says, is that it is
positioned to help the businesses in which it invests to break into
foreign markets, particularly Japan. At least two examples back up
this claim. The trader is the Japanese distributor for SONUS
NETWORKS, INC. (see Japan-U.S.
Business Report No. 358, July 1999, p. 35), a
Westford, Massachusetts supplier of products for the
Voice-over-Internet Protocol market in which Globe LinQ has a $3
million stake, while a subsidiary represents software developer XAACT
TECHNOLOGIES, INC. (see Japan-U.S.
Business Report No. 365, February 2000, p. 25);
Globe LinQ invested $1 million in that Santa Clara, California firm.

OMRON CORP., best known as a manufacturer of automated control
components, is following the same course, although not in such an
institutionalized way. It has given a three-person team within OMRON
ADVANCED SYSTEMS, INC. in Santa Clara, California responsibility not
just for identifying promising North American IT start-ups but also
for making the decision to invest. The group will have at least $18.3
million a year with which to work, but Omron could make as much as
$91.7 million available annually if circumstances warrant. The team's
primary decisionmaking criterion is to invest in companies that will
help Omron expand its own IT operations either directly or through
technology transfers rather than to seek capital appreciation. In the
last three years, Omron has invested $22.9 million in North American
start-ups.

Along with STANDARD & POOR'S CORP., the Tokyo Stock Exchange,
the New York Stock Exchange and Germany's Deutsche Boerse are
launching the first global stock index fund. As its name indicates,
the S&P Global 100 Index will mirror the performance of the 100
multinationals making up the index. This select group incorporates 12
Japanese companies, including SONY CORP. and TOYOTA MOTOR CORP., 30
American corporations, such as AMERICA ONLINE, INC., GENERAL ELECTRIC
CO., INTEL CORP. and MICROSOFT CORP., and DAIMLERCHRYSLER AG plus 41
other European businesses. Together, they represent roughly
one-fourth of the world's total equity market capitalization. The
fund's shares will trade on all three participating stock exchanges,
enabling virtually round-the-clock trading. The S&P Global 100
Index is expected to appeal mainly to institutional investors.

FOOD AND AGRICULTURAL PRODUCTS

Through a series of acquisitions dating back to 1981, MITSUKAN
CO., LTD. has emerged as the U.S. sales leader in food vinegars. It
recently solidified this position through the $13.8 million or so
purchase of SPEACO FOODS, INC. The Kansas City,
Missouri-headquartered company has plants in Rogers, Arkansas, Lodi,
California and Dallas as well as in Kansas City. In addition to
producing an assortment of vinegars, Speaco Foods makes such other
products as ciders, sauces, condiments and juices. Sales,
particularly to private-label grocery wholesalers and retailers, run
around $20 million a year. Not only does the Speaco Foods purchase
boost the market share of NAKANO FOODS, INC., the actual buyer, to 37
percent, but it gives the Arlington Heights, Illinois-based company
production capacity through the middle of the United States,
complementing its eight factories on the East and West Coasts. Nakano
Foods specializes in value-added products, such as seasoned vinegars.
For that reason, while it is the sales leader, it ranks a distant
second to San Francisco's BURNS PHILP FOOD, INC. in terms of volume.

MERCHANDISING

The weakness in consumer spending in Japan has hit department
stores harder than any other group of retailers, forcing them to take
a hard look at all aspects of their operations. For MATSUZAKAYA CO.,
LTD., the nation's fifth-largest chain, that review has led to the
decision to close the company's Los Angeles store, which has been in
business since 1980. The shutdown will occur no later than this
October, when Matsuzakaya will liquidate the subsidiary that runs the
outlet.

NONELECTRIC MACHINERY

Although assembly operations began less than a year ago, YUSHIN
AMERICA, INC. believes that strong U.S. demand for its
parts-unloading robots for plastic injection-molding machines will
enable it to boost production to 100-plus units this year from 70 in
1999. The Cranston, Rhode Island company, in which YUSHIN PRECISION
EQUIPMENT CO., LTD. has a 60 percent stake, also will add a series of
three- or four-axis, all-servo-drive robots for injection molders
with clamping forces from 500 tons to 3,000 tons. The robots
assembled to date have been designed to work with smaller injection
molders. Yushin America generated sales of $26.6 million in the year
through March 1999 from the wide range of automation equipment it
supplies for the plastics industry. In FY 2004, it hopes to double
this figure.

The decision by BELOIT CORP., a big manufacturer of paper-making
equipment, to go out of business is creating both problems and
opportunities for MITSUBISHI HEAVY INDUSTRIES, LTD. On the negative
side, MHI is likely to take a loss on the 20 percent share of the
Beloit, Wisconsin-headquartered company that it has owned since 1986.
On the plus side, after paying Beloit $22 million for certain
paper-making machinery patents and intellectual property rights, the
Japanese manufacturer is free to expand its own business. In
particular, MHI will be able to sell equipment in regions outside
Asia and Oceania, something that it could not do under its contract
with Beloit. By combining its own expertise with its former partner's
technology and trying to win over Beloit's customer base, MHI
believes that it can lift sales of paper-making machinery to $458.7
million in FY 2000  more than triple the projected total for FY
1999.

Fifteen years after BARUDAN CO., LTD., a manufacturer of
embroidery and monogram machines, acquired a U.S. production base now
located in Solon, Ohio, the company has gone to direct sales in North
America. BARUDAN AMERICA, INC. bought the Greensboro, North
Carolina-based sales and technical support divisions of its U.S.
distributor, MACPHERSON MEISTERGRAM, INC., from WILLCOX AND GIBBS CO.
Earlier, it had purchased its Canadian distributor from the same
Carteret, New Jersey company. Barudan America makes single-head to
20-head Barudan embroidery machines and produces monogram machines
under the Meistergram brand at its factory outside Cleveland.

Like other Japanese makers of construction equipment, YANMAR
DIESEL ENGINE CO., LTD. hopes to make up for lagging sales at home by
doing more business in the United States. It has formed a direct
sales unit at YANMAR DIESEL AMERICA CORP. in Buffalo Grove, Illinois,
where its U.S. diesel engine and tractor parts marketing operations
are located. The main product is the ViO-70 compact hydraulic
excavator. The 7-ton version of the ViO line with its distinctive
rounded body, the machine is designed for confined urban work
settings since the cabin, bonnet and boom bracket all stay within the
track width when swiveling. The bucket capacity of the ViO-70 is 0.37
cubic yards; it can dig to depths of almost 14 feet. The marketing
staff is directing most of its ViO-70 efforts to construction
equipment rental companies.

ELLIOTT CO., one of the world's largest makers of steam turbines
and compressors for the petrochemical, oil-refining, oil and gas, and
power-generation industries, soon will be a wholly owned EBARA CORP.
subsidiary. The manufacturer of pumps and air blowers will buy out
equal partner MAN AG for an undisclosed price. Since June 1998, Ebara
and the German company have shared ownership of Elliott, which had
sales of roughly $400 million in the year through May 1999 and
employs some 2,000 people worldwide. Both previously were minority
investors and licensees of the Jeannette, Pennsylvania firm's
turbomachinery technology. Elliott readily admits that its 32-year
relationship with Ebara has helped to strongly position the company's
products in Asia. Part of the Japanese manufacturer's near-term
business plan is to accelerate its commercialization of cogeneration
systems using Elliott's microgas-turbine technology.

Big plant engineering contractor JGC CORP. is working with GENERAL
ELECTRIC CO. on a combined- cycle (gas and steam turbine) power plant
that runs off a new fuel source. The Japanese company has devised a
system that uses the product from further refinement of the heavy oil
residues left after the distillation of gasoline and other
petrochemical products. It calculates that the proposed
combined-cycle power plant will have a 50 percent fuel efficiency.
While that is below the 58 percent rating of today's most efficient
equipment and the 60 percent operating efficiency of GE's
just-unveiled next-generation H System gas turbine, JGC says that
there is a trade-off in terms of lower initial investment costs. If
their collaboration succeeds, JGC and GE will market the resulting
combined-cycle system to the new breed of independent power producers
as well as to traditional electric utilities in Japan and elsewhere.

PHOTO EQUIPMENT AND COPIERS

A $300 million-plus expansion is underway at FUJI PHOTO FILM CO.,
LTD.'s huge manufacturing complex in Greenwood, South Carolina. The
project includes a second plant for color photographic film and
photographic paper and Fujifilm's first U.S. factory for X-ray film
for the health-care industry. The two plants are to be completed in
early 2001. Additional space in Greenwood's distribution facility,
already the largest that Fujifilm operates anywhere in the world, is
covered as well. The latest expansion boosts Fujifilm's investment in
its South Carolina production center, which opened in 1989, to more
than $1.3 billion. The new capacity will create in excess of 200
jobs, increasing employment at the campus to approximately 1,500
people. The 500-acre Greenwood complex now houses six manufacturing
plants, plus the recently opened Greenwood Research Laboratories and
the distribution center. The current production line-up spans 35mm
color film and photographic paper, QuickSnap disposable cameras,
DLTtape data-storage media, VHS-format videotape for the consumer and
duplication markets, and presensitized plates and film for the
graphic arts market.

ASAHI OPTICAL CO., LTD., the maker of Pentex-brand photographic
equipment, and HEWLETT- PACKARD CO. have teamed up to develop
state-of-the-art digital camera platforms. Their initial product,
scheduled for summer release, is a 2-megapixel-class CCD
(charge-coupled device) camera. Asahi Optical will manufacture the
codeveloped product, which each of the partners will sell under its
own name. The Japanese supplier of optical products and precision
instruments has not released a digital camera model since August
1997. The alliance with HP should help Asahi Optical get back into
this fast-changing market. HP has been active in digital camera
technical development in recent years and has come up with an imaging
technology that improves the overall image quality of each picture
taken by adjusting for lighting conditions.

In a deal designed to make digital imaging more accessible to
consumers by eliminating the need for a digital camera or a scanner
to input pictures into a PC, MICROSOFT CORP. has arranged for the
U.S. subsidiary of FUJI PHOTO FILM CO., LTD. to incorporate its
Picture It! Express 2000 photo-editing software into every new
Fujicolor photo CD. Thanks to this combination, people who chose to
get their pictures back from Fujifilm photo processors on a CD can
edit and enhance them on their PCs and then share them
electronically.

The Long Beach, California subsidiary of SEIKO EPSON CORP. is
offering EPSON Software Film Factory photo-management software for
Macintosh users as well as for Windows-based machines. The $30
package allows photographers to import, catalog, edit and print
pictures from their collections of digital images. One unusual
feature of Film Factory is that, like a one-hour photo lab, it can
process and print batches of photos.

ASAHI GLASS CO., LTD. has a new U.S. distribution arrangement for
its Pictorico Ink Jet Media line of specialty papers for digital
images. The Melville, New York subsidiary of digital camera maker
OLYMPUS OPTICAL CO., LTD. gained exclusive rights to market certain
newly cobranded Pictorico media to traditional retail outlets. It
also will distribute other Pictorico specialty papers to these
channels. AGA CHEMICALS, INC., which previously handled all Pictorico
distribution in the United States, will market the media on-line.

PRECISION AND MEDICAL EQUIPMENT

More than a few Japanese multinationals experiment with different
ways of doing business in the United States before introducing
successful methods in Japan. The latest case in point is the decision
by AN- RITSU CORP., a major maker of measuring instruments,
particularly communications test equipment, to launch Internet sales
in the United States this summer. Its Morgan Hill, California
manufacturing and marketing subsidiary will be in charge of the
$917,400 project, which involves construction of an intranet to
transfer information on orders placed through the company's new home
page to factories. Initially, test equipment for mobile
communications equipment will be offered through the site. Anritsu
sees Internet sales as key to boosting its affiliate's sales to
$412.8 million in FY 2002, more than double projected FY 1999
revenues (see Japan-U.S.
Business Report No. 360, September 1999, p. 8).

GOODMAN CO., LTD., one of Japan's major importers and wholesalers
of medical equipment, will acquire INTELLA INTERVENTIONAL SYSTEMS,
INC. in April. The Sunnyvale, California start-up makes a variety of
interventional vascular products used in treating atherosclerotic
lesions, including guide wires, balloon- on-a-wire systems, rapid
exchange systems, over-the-wire systems and stent delivery systems.
Goodman will pay roughly $10.5 million for Intella, which had sales
of $7.2 million last year. The two firms have worked together on
product development since 1996. Goodman, which is strongest in
catheters, started selling Intella's products on an exclusive basis
in the spring of 1998.

SEMICONDUCTORS

Booming demand for cellular telephones is benefiting ALLEGRO
MICROSYSTEMS, INC., a specialist in mixed-signal integrated circuits.
The Worcester, Massachusetts company, a SANKEN ELECTRIC CO., LTD.
subsidiary, is ramping up production of IC sensors for flip-type cell
phones. The part senses when the lid is opened or closed and sends a
signal to the battery to turn the power on or off. Allegro now makes
about 500,000 of the sensor monthly, but through an investment of
$2.1 million this year, it will be able to turn out 2.5 million units
a month. That will raise total monthly IC sensor output to 14 million
units. Most of this production is for motor vehicles (see
Japan-U.S. Business Report
No. 362, November 1999, p. 11).

Chipmaker ROHM CO., LTD., a longtime producer in the United
States, is moving its 10-year-old design and development center from
San Jose, California to San Diego, where a number of leaders in the
cell phone business are located. ROHM LSI SYSTEMS U.S.A., LLC will
focus on high-performance system chips for the next generation of
mobile phones. The relocated center will be staffed by 15 people, the
same number who work in San Jose, but over the next three years, Rohm
hopes to raise the total to 50 people. Most of Rohm LSI Systems' work
is in the area of ASICs (application-specific ICs).

In a coup for SONY CORP. and its effort to make its Memory Stick
technology the de facto IC recording media standard for the next
generation of portable digital devices, TEXAS INSTRUMENTS INC. will
develop semiconductors that help hardware manufacturers commercialize
Memory Stick-compliant products. To date, Sony has been the sole
maker of Memory Stick chips. The electronics giant will provide
technical support to TI for such Memory Stick technologies as
MagicGate copyright protection and ATRAC3 audio compression. TI will
bring to the job its considerable expertise in DSP chips. Since it is
the dominant supplier of DSPs for cell phones, analysts expect the
company to devote part of its energies to designing ICs that make
these products Memory Stick-enabled.

As part of the overhaul of its massive semiconductor business,
TOSHIBA CORP. gave KINGSTON TECHNOLOGY CORP. complete responsibility
for establishing a new supply chain management model for the
company's DRAM business outside Japan. The partners describe the deal
as enabling Toshiba customers to receive finished DRAM products when
and where they need them. Fountain Valley, California-based Kingston,
a manufacturer of memory enhancement products with facilities around
the world, will be in charge of DRAM supply chain management, global
logistics, module manufacturing, testing and order processing. For
its part, Toshiba will continue to handle all customer contacts and
will manage product positioning, customer relationship and ongoing
sales activities. The new arrangement will be introduced first in
North America and then extended this summer to Europe and Asia.

About a year and a half after closing its wafer-fab-rication
facility in Irving, Texas, HITACHI, LTD. has returned to the city.
This time, however, Irving will the center of the company's American
semiconductor manufacturing equipment operations. Hitachi is building
a facility to house sales, service, parts, customer technical
training and support activities for the Semiconductor Equipment Group
of its U.S. subsidiary. The building will include a state-of-the-art
clean room as well as a 200mm (8-inch) and 300mm (12-inch) tool
demonstration laboratory for Hitachi's etch, ion-beam, implant and
gas-abatement systems. The Semiconductor Equipment Group currently
employs 45 salespeople, technicians, engineers and other staff, but
this number will be increased by 30 percent to support the new
facility.

TOKYO ELECTRON LTD., Japan's top maker of semiconductor
manufacturing equipment, is working with DOW CHEMICAL CO. to advance
the development of processes and equipment modules for materials with
a low or an ultralow dielectric constant for 0.13-micron and even
smaller chip geometries using the Midland, Michigan company's SiLK
semiconductor dielectric resins. The primary focus of their
collaboration, which will be implemented on TEL's side through its
Austin, Texas subsidiary, will be processes and equipment for spin-on
deposition of low-k dielectric materials. Dow developed SiLK resins
for use an an interlayer dielectric material for next-generation ICs.
The product's characteristics produce devices with faster processing
speeds and reduced "cross talk." SiLK and other Dow semiconductor-
grade materials are available in Japan through a partnership with
HITACHI CHEMICAL CO., LTD. (see
Japan-U.S. Business Report
No. 360, September 1999, p. 12).

IC assembler MITSUI HIGH-TEC, INC., one of the licensees of
TESSERA INC.'s chip-scale packaging technology, is working with the
San Jose, California firm to extend its BGA (ball grid array) CSP
technique to next-generation products. At the heart of the new
relationship is Tessera's WAVE (wide area vertical expansion)
process, which the company believes will bring the benefits of its
CSP packaging to such high-pin-count, high-performance products as
high-speed memories, ASICs and processors. Mitsui High- tec and
Tessera initially will develop a high-volume single-chip
manufacturing process for the WAVE technology. Then they will partner
on a wafer-level WAVE manufacturing process. The collaboration should
position Mitsui High-tec to be the first assembler capable of
offering the new CSP method to chipmakers.

Responding to the demand from semiconductor manufacturers for a
higher-throughput scanner with both 200mm and 300mm wafer
capabilities, the Semiconductor Equipment Division of CANON INC.'s
U.S. subsidiary introduced the FPA-5000ES2+. This krypton scanner is
engineered for the 150-nanometer design rule. With the speed
enhancement of a 2-kilohertz excimer laser, the FPA-5000ES2+ can
expose 125 200mm wafers per hour, or 25 percent more than its
year-old predecessor. Among other improvements, it provides better
overlay accuracy, minimized lens distortion and reduced wavefront
aberrations.

SOFTWARE AND INFORMATION SERVICES

Two SOFTBANK CORP. venture-capital funds threw out a $57 million
lifeline to TOYS "R" US, INC.'s struggling on-line retail business.
TOYSRUS.COM generated a tremendous amount of negative publicity when
it was unable to deliver in a timely manner all the orders that had
flooded into its site before Christmas. However, SOFTBANK VENTURE
CAPITAL and SOFTBANK CAPITAL PARTNERS LP, which acquired an
undisclosed minority position in Toysrus.-com, apparently looked
beyond those problems and saw a company that has one of the world's
most recognizable brand names and that, in their opinion, is
positioned to become the global leader in children's products sold
over the Internet. Toys "R" Us said that the Softbank money would be
used to accelerate the development of Toysrus.com's infrastructure to
support future growth. The same use will be made of the capital that
the company received from three other U.S. private equity firms. As
part of the Softbank deal, its two venture-capital funds bought
warrants at a cost of $10 million to acquire 1.2 million shares of
Toys "R" Us common stock at $13 per share.

SOFTBANK CAPITAL PARTNERS LP, which operates out of Newton Center,
Massachusetts, also invested $31 million in ODIMO.COM (formerly
Diamonddepot.com), which bills itself as the largest source of
certificated diamonds, fine jewelry and brand-name watches on the
Internet. The Fort Lauderdale, Florida-based company is majority
owned by THE STEINMETZ DIAMOND GROUP, an international diamond
trading organization. It and Odimo.com's other original investors put
another $5 million into the firm. The diamond and jewelry e-tailer
will use the $36 million to expand into Japan and Europe with help
from SOFTBANK CORP.

For its part, SOFTBANK VENTURE CAPITAL of Mountain View,
California led a second round of financing for REELPLAY.COM that
raised more than $4.5 million. Launched in October 1999, the Santa
Monica, California start-up is positioning itself to become the
leading B2B on-line marketplace for the film and TV industry. It
provides a forum for buying, selling and marketing motion pictures
and television programming. To date, Reelplay.com has assembled a
data base of more 5,000 new film and TV products from 1,000- plus
film and television production and sales companies. It also has
created unique Web sites for these properties. The company will use
the new financing to continue its expansion.

A third round of fund-raising for TRAININGNET INC., which
specializes in helping companies with skills training and
professional education, generated $33.7 million, including money from
new investor HIKARI TSUSHIN, INC. The Billerica, Massachusetts
company will use the capital to both broaden and deepen operations in
order to strengthen what it says is its top ranking in the on-line
B2B marketplace for professional training. TrainingNet makes its
products and services available through a variety of means: corporate
intranets, the career sections of high-traffic Web sites, business
and professional-oriented Web sites and its own Web site.

HIKARI TSUSHIN, INC., Japan's top distributor of cellular phones,
also joined in a second round of financing that generated $27 million
for FLOOZ.COM, INC. The New York City company is the creator of the
Internet's Flooz gift-giving currency. Sent by e-mail, the "money"
can be spent at more than 60 Floozworthy on-line stores. Flooz.com
also offers a free, personalized reminder service for special
occasions. The business will use the new capital to expand its sales
and marketing efforts as well as to accelerate product development.

Other Japanese companies occasionally are willing to risk a few
million dollars on pre-IPO companies in the hope not only of racking
up capital gains but also of expanding their activities at home by
partnering with the start-up. For instance, NISSHO ELECTRONICS CORP.
participated in a $22.8 million third round of fund-raising for
PROACTIVENET, INC. The Santa Clara, California firm is in what is
known as the e- business transaction performance management field.
Its recently announced eBiz.Site and eBiz.SP "intelligent" management
solutions help Web-site operators improve the reliability and the
performance of their sites in real time. ProactiveNet will use the
proceeds from the latest financing round for sales, marketing and
product development efforts. The company describes Nissho Electronics
as its business partner in Japan, although to date, no plans have
been finalized for ProactiveNet to move into the Japanese market.

Through its GLOBE LINQ, LLC information-tech-nology investment
unit, NISSHO IWAI CORP. put up money for BIGFOOT INTERACTIVE during
the direct e-marketing solutions company's latest round of funding.
The investment in the New York City business, a unit of BIGFOOT
INTERNATIONAL, INC., was a prelude to bringing Bigfoot Interactive's
services to Japan. Under a licensing agreement, Nissho Iwai will
introduce in April a Japanese-language version of its new partner's
secure, Web-based software for creating and executing personalized,
real-time e-mail marketing campaigns. Industry sources say that the
trader and Bigfoot Interactive could form a Japanese joint venture as
soon as this fall.

In a parallel move, NISSHO IWAI CORP. joined other investors in a
second round of funding for ZKEY.- COM that totaled more than $14.2
million and announced plans to introduce the Los Angeles company's
simplified and secure information exchange, storage and retrieval
service in Japan in the spring. Zkey.com's ambition is to use its
core technologies to make Internet-based content the standard medium
for all information-exchange procedures. For the Japanese market,
Nissho Iwai will localize some functions of the Zkey Web site.

With an eye on the rapid growth of Internet-ena-bled mobile phones
in Japan, MITSUBISHI CORP. and its MC CAPITAL INC. investment banking
unit put up funds for the first major outside round of financing
undertaken by DEJIMA, INC. The Mountain View, California start-up is
the developer of the AASAP (adaptive agent software architecture
platform) technology for natural-language command and control of both
fixed and wireless Internet applications. The two Japanese companies
see considerable opportunity for Dejima's AASAP at home because this
interface makes it easier for Internet services providers to deploy
wireless data services and for consumers to access them.

A Tokyo start-up that specializes in developing software for the
eXtensible Markup Language that plays such a key role in e-business
activity has formed a marketing subsidiary in Beverly, Massachusetts.
The INFOTERIA INC. unit, which is staffed initially by six people but
could have as many as 20 employees in a year, not only will handle
sales but also will gather information on Internet technical
developments that could be used to hone its parent's software.
Infoteria hopes to produce 30 percent of its projected FY 2000 sales
of $4.6 million in the United States.

TELECOMMUNICATIONS

In fairly quick order, NEC AMERICA, INC. found a contract
manufacturer to buy its 15-year-old Hillsboro, Oregon communications
network equipment and automotive electronics plant and continue
production under the NEC brand name (see
Japan-U.S. Business Report
No. 362, November 1999, pp. 12-13). Singapore's
NATSTEEL ELECTRONICS LTD. will pay $200 million for the facility,
which, by coincidence, generated sales on that order in 1999. It also
has a three-year supply contract with NEC America that should go into
effect April 1. NatSteel Electronics will take over the plant's
700-person work force. It says that no layoffs are planned, even
though the factory is operating only at 60 percent capacity. To boost
that rate, NatSteel Electronics hopes to win outsourcing contracts
from other manufacturers. NEC will use the proceeds from the sale for
Internet investments.

Like other Japanese makers of high-speed optical network
equipment, HITACHI, LTD. is trying to position its products to
capitalize on the huge amount of investment going into communications
infrastructure in the United States. The company's Advanced
Multiservices Network family, particularly the AMN 6100 DWDM (dense
wavelength-division multiplexing) system, is a primary focus of this
strategy. HITACHI TELECOM (USA), INC., which makes the AMN line at
its Norcross, Georgia facility, announced two immediate enhancements
to the AMN 6100 as well as a growth path over the next year-plus. One
addition is transmux (transparent transponder/multiplexer)
capability. This feature multiplexes OC-12 (622 megabits per second)
and OC-48 (2.5 gigabits per second) circuits onto the OC-192
(10-Gbps) channels of the AMN 6100 for full utilization of the
system's backbone transport bandwidth as well as savings in footprint
and such other operating costs as power consumption. The other AMN
6100 upgrade available now is an optical add/drop multiplexer
capability through which one-fourth of the system's channels can be
added or dropped at an amplifier site. Upcoming enhancements include
in-service growth to 64 OC- 192 channels (640 Gbps of capacity) or to
128 OC-192 channels (1.28 terabits per second of capacity).

Through a partnership with ARTISOFT, INC., a Cambridge,
Massachusetts supplier of computer telephony and communications
software, TOSHIBA CORP. is moving into the emerging world market for
server-based PBXs (private branch exchanges) for small and midsize
businesses. Such products allow for the integration of Internet
technologies and give companies a common strategy for managing voice
and data traffic. Under the three-year deal, which is being executed
by the Telecommunication Systems Division of Irvine, California-based
TOSHIBA AMERICA INFORMATION SYSTEMS, INC., the company will license
Artisoft's TeleVantage PBX solution and customize it for
incorporation with its Strata CS line of computer telephony systems
and communications server products. TAIS and Artisoft will join
forces on international marketing  including, perhaps as soon
as next year, Japan  as well as on technical collaboration. As
part of their agreement, TAIS made an equity investment of
undisclosed size in Artisoft.

KYUSHU MATSUSHITA ELECTRIC CO., LTD. has joined such big names as
CISCO SYSTEMS, INC. in investing in SHAREWAVE, INC. The El Dorado,
California company is in the forefront of the drive to bring
high-performance, multimedia-capable broadband wireless home
networking to the mass market. Last spring, ShareWave teamed with
Kyushu Matsushita Electric to accelerate the development of high-
speed, low-cost home networking devices using its 11-Mbps wireless
components and Whitecap network protocol (see
Japan-U.S. Business Report
No. 357, June 1999, p. 30).

KYOCERA WIRELESS CORP. is in operation, having completed the
acquisition of substantially all of the assets of QUALCOMM INC.'s
$1.4-billion-a-year CDMA (code-division multiple access) wireless
handset business (see Japan-U.S.
Business Report No. 364, January 2000, p. 10). San
Diego, California- headquartered KWC is in charge of the design,
engineering, manufacturing, marketing and customer service of
existing Qualcomm digital cellular phones and new Kyocera wireless
handsets. These products range from entry-level CDMA wireless phones
to next-generation models with advanced PDA (personal digital
assistant), Internet access and e-mail capabilities.

The first products previewed by KYOCERA WIRELESS CORP. are
targeted at opposite ends of the market. Occupying the entry-level
space are the QCP 2035, a trimode phone that operates on 1,900-MHz
CDMA digital PCS (personal communications services) and 800-MHz CDMA
digital and analog cellular networks, and the QCP 2008, an 800-MHz
dual-mode CDMA digital and analog cellular handset. Both weigh just
over four ounces and have changeable translucent faceplates. They
feature talk times of up to 3.75 hours and standby times of up to 5.5
days in digital mode. At the other end of the market, KWC introduced
the QCP 3035, a trimode CDMA phone with such features as a built-in
speakerphone, voice- activated dialing, Web-browsing and e-mail
capabilities, and rapid text-entry technology. All three products are
expected to ship in the third quarter of 2000.

After ending U.S. production of analog wireless phones in March
1998 because of rising costs and weak sales, MATSUSHITA COMMUNICATION
INDUSTRIAL CO., LTD. is set to return this year to the huge American
cellular market. Actual reentry plans are still in flux, however. One
possibility is to resume output at MATSUSHITA COMMUNICATION
INDUSTRIAL CORP. OF U.S.A. in Peachtree City, Georgia, which
primarily manufactures automotive audio products. Alternatively,
handsets could be supplied from MCI's offshore plants. Whatever the
source, the initial products will be digital phones that operate on
the TDMA (time-division multiple access) network, the most prevalent
digital wireless standard in the United States. For the last two
years, MCI, which is a far bigger player in Japan's cellular market
than it is overseas, has kept its finger on the pulse of the U.S.
mobile phone market through MATSUSHITA MOBILE COMMUNICATION
DEVELOPMENT CORP. U.S.A. in Suwanee, Georgia.

Digital wireless network technology might not be as advanced in
the United States as it is in Japan, but the sheer size of the
American market makes this country a magnet for Japanese suppliers.
SHARP CORP., for example, has forged an alliance with LUCENT
TECHNOLOGIES INC. to codevelop CDMA-format digital cellular handsets
and wireless multimedia devices. The partnership will draw on Sharp's
expertise in making cell phones compact and lightweight and Lucent's
strength in building CDMA network infrastructure. The first
Sharp-brand CDMA handsets should appear on the market in the spring
of 2001. .....For its part, SHINTOM CO., LTD., which now sells
roughly 1 million analog cell phones here annually through its
Torrance, California subsidiary, plans a September release of digital
handsets that conform to the GSM (global system for mobile
communications) standard. This format is most prevalent in Europe,
but it is starting to make inroads in the United States. Other
Shintom products scheduled for introduction this year include a
dual-mode TDMA digital/analog handset.

TAIYO YUDEN CO., LTD., a manufacturer of high-frequency modules
for communications, computer and other applications, has tied up with
a second American company in an effort to get a head start on
products based on the next-generation Bluetooth short-range wireless
communications standard. Its latest alliance is with SYBERSAY
COMMUNICATIONS CORP., a Sunnyvale, California start-up that is
developing what it calls wireless personal link interfaces between
people and devices of all types. These will allow consumers to
operate cell phones, PDAs, PCs and other products hands-free using
proprietary voice-recognition software. The agreement includes a $1
million equity investment by Taiyo Yuden as well as the provision of
development funds to SyberSay. The first product to emerge from the
partnership will be the SyberPod miniature wireless transceiver. It
should be available later this year. Taiyo Yuden also will introduce
SyberSay products in Japan. Its other Bluetooth alliance is with
SILICON WAVE, INC. (see
Japan-U.S. Business Report
No. 362, November 1999, p. 11).

Continuing to gain ground on MATSUSHITA ELECTRIC INDUSTRIAL CO.,
LTD. in the digital studioand field broadcasting equipment market,
SONY CORP. has landed a $15.6 million or so contract from NATIONAL
BROADCASTING CO. The order includes MPEG IMX videotape recorders,
which can transfer data at a rate of 50 Mbps, digital switchers,
digital multieffect systems and monitors. Sony also is supplying
digital broadcasting equipment to CBS CORP. (see
Japan-U.S. Business Report
No. 363, December 1999, p. 13) and to CABLE NEWS
NETWORK INC. (see Japan-U.S.
Business Report No. 356, May 1999, pp. 9-10).

TRANSPORTATION EQUIPMENT

Determined to cut procurement costs by 20 percent to get its
business back in the black, NISSAN MOTOR CO., LTD. became the first
Japanese automotive manufacturer to agree to join the Internet
marketplace for parts that GENERAL MOTORS CORP., FORD MOTOR CO. and
DAIMLERCHRYSLER AG just agreed to form. RENAULT S.A., the controlling
owner of Japan's number-two vehicle builder, also will participate in
the unnamed on-line B2B exchange. The Detroit-spearheaded venture
will replace separate sites that GM, Ford and DaimlerChrysler had
planned to operate. The trio expects to channel some $240 billion in
annual parts spending through the exchange, which will be powered by
technology from ORACLE CORP. and COMMERCE ONE, INC. The addition of
some of the business that their suppliers do as well as purchases by
Nissan, Renault and other future partners could boost the potential
trading volume by several multiples. In the future, GM's three
Japanese affiliates  FUJI HEAVY INDUSTRIES, LTD., ISUZU MOTORS
LTD. and SUZUKI MOTOR CORP.  are likely to participate, as is
Ford's MAZDA MOTOR CORP. unit. Analysts expect the Japanese
participants to switch only a portion of their procurement to the
Internet, primarily basic materials and commodity parts.

Although it has expressed qualified interest in joining this
exchange, TOYOTA MOTOR CORP.'s initial venture into the world of B2B
e-commerce in the United States will take a different direction. Its
Torrance, California sales subsidiary is teaming up with I2
TECHNOLOGIES, INC. to pursue the $100 billion aftermarket for parts
in this country. ISTARXCHANGE, in which TOYOTA MOTOR SALES U.S.A.,
INC. will have a majority interest, will be open to suppliers of
everything from mufflers and spark plugs to accessories as well as
distributors, independent retailers, dealerships and installers.
Whether buyers or sellers, users of iStarXchange should be able to
lower their transaction costs. The on-line marketplace could be up
and running as soon as this spring. Irving, Texas-based i2
Technologies will provide the software and host and manage the
service. iStarXchange will be located in Torrance and eventually will
be staffed by 100 people.

Next year, HINO MOTORS, LTD. will broaden the lineup of commercial
trucks it sells in the United States by introducing the cab-over
Dutro. The 1,564 trucks that its Orangeburg, New York distribution
unit sold in 1999 all were in the Class 4 to Class 7 segments, which
run in gross vehicle weight from 14,000 pounds to 33,000 pounds. The
Dutro, designed for deliveries in crowded cities, falls at the bottom
of this range. To support the launch, HINO DIESEL TRUCKS (U.S.A),
INC. is trying to sign up new dealers. It currently has marketing
tie-ups with some 100 stores.

HONDA MOTOR CO., LTD., the first Japanese vehicle maker to build
its products in the United States, has achieved another distinction.
Its Marysville, Ohio factory has turned out 5 million Accord sedans.
Production of this model, which ranks every year among the
top-selling cars, began in 1982.

Few of its rivals at home have enjoyed the U.S. production and
sales successes of this pioneering company. Certainly not MITSUBISHI
MOTORS CORP. Its Normal, Illinois assembly plant, which currently
produces the Galant sedan, Eclipse sports coupe and Eclipse Spy-der
convertible, never has reached capacity operation of 240,000 vehicles
a year. Japan's fourth-largest automotive firm is out to change that,
however. It has made a $1 billion-plus commitment to plan, design,
engineer and manufacture key products in the United States under the
heading of Project America. These vehicles will be built on a common
platform, the PA Series, that can accommodate powerplants, suspension
systems and drivetrains adaptable to the demands of U.S. buyers. The
first Project America model will be the next generation of the now
made-in-Japan Montero Sport sport-utility vehicle. It will be the
product of MITSUBISHI RESEARCH AND DESIGN AMERICA, INC.'s design
studio in Cypress, California and engineering unit in Ann Arbor,
Michigan and will be built by MITSUBISHI MOTOR MANUFACTURING OF
AMERICA, INC. starting in 2003. Through 2005, the next generation of
the Galant sedan, Eclipse sports coupe and Eclipse Spyder convertible
will be planned, designed and engineered by MRDA and assembled by
MMMA.

At a cost of $20 million, TOYODA GOSEI CO., LTD. acquired the
Fluid Systems business of EAGLE- PICHER INDUSTRIES, INC. With plants
in Brighton, Michigan and in England, this unit manufactures custom
thermoplastic tubing assemblies for automative fuel, emission, brake,
clutch and suspension systems. The renamed TG FLUID SYSTEMS USA CORP.
employs 69 people and has annual sales of roughly $5.2 million. It
joins two other wholly owned Toyoda Gosei production companies here:
TG KENTUCKY CORP. of Lebanon, Kentucky and Perryville, Missouri-based
TG MISSOURI CORP., both of which make such plastic interior and
exterior parts as steering wheels and side molding. Toyoda Gosei also
has a half interest in CALIFORNIA AUTOMOTIVE SEALING INC. of Hayward,
California, a supplier of weather strip and trim (see
Japan-U.S. Business Report
No. 359, August 1999, p. 12).

Through an investment of $6.4 million to $7.3 million spread over
this year and next, F.C.C. CO., LTD. hopes to be able to boost output
of automatic transmission clutches at its JAYTEC, INC. subsidiary by
enough that it can end the $27.5 million or so worth of parts that it
now has to ship yearly from Japan to meet the requirements of HONDA
TRANSMISSION MANUFACTURING OF AMERICA, INC. Portland, Indiana-based
Jaytec currently can make 16,000 AT clutches daily for the Accord and
Civic sedan and coupe and the Odyssey minivan. Once the additional
capacity is fully operational in 2003, it will be able to turn out
23,000 units a day. By then, the local content of the clutches is
expected to hit 95 percent from 70 percent. Last year, F.C.C.
invested $9.2 million in 11-year-old Jaytec to increase production of
AT segmented clutch friction disks (see
Japan-U.S. Business Report
No. 360, September 1999, p. 10).

KOYO SEIKO CO., LTD. has finalized plans for delivering 460,000 of
its innovative column-type electric power-steering units to GENERAL
MOTORS CORP. starting in 2001 for a sport-utility model (110,000
units) and a new Saturn model (350,000 units). Initial shipments will
come from Japan. However, once the Roanoke, Virginia factory of KOYO
STEERING SYSTEMS OF USA, INC. is operational toward mid-2001 (see
Japan-U.S. Business Report
No. 355, April 1999, pp. 10-11), it will be responsible
for fulfillment of the roughly $91.7 million contract. Koyo Seiko's
electric power-steering system has attracted attention because it
improves fuel efficiency compared with today's dominant hydraulic
unit.

An additional order from sole customer NEW UNITED MOTOR
MANUFACTURING INC. is behind a $3.2 million expansion at SEKISO
INDUSTRIES AMERICA INC. in Tracy, California. Within this year, the
NIHON SEKISO INDUSTRIES LTD. subsidiary will expand its plant and
install four more plastic blow-molding systems to turn out what is
called a porous duct for engines and a dashboard air-conditioning
duct for the 370,000 or so Toyota Corolla and Chevrolet Prizm sedans
and Toyota Tacoma pickup trucks assembled annually by Fremont,
California-headquartered NUMMI. SIA currently supplies the plant,
equally owned by TOYOTA MOTOR CORP. and GENERAL MOTORS CORP., with
wheel insulators and heat-shrinkable tubing. With the new product
lineup, employment at SIA should rise to 30 from seven at present.

The combined floor space at NORTH AMERICAN LIGHTING, INC.'s
already large plants in Flora, Illinois and Salem, Illinois will be
expanded by more than 20 percent at a cost of around $27.5 million.
Majority owner KOITO MANUFACTURING CO., LTD. expects the additional
space to be ready by early 2001. It will house new process equipment
to make lighting products for upcoming models built by FORD MOTOR
CO., HONDA MOTOR CO., LTD., TOYOTA MOTOR CORP. and other customers.
At the same time, NAL, which Koito set up in 1983 along with another
Japanese company and a German partner, will divide product
responsibility more clearly between its two factories. The original
Flora plant will specialize in headlights, while the Salem factory,
operational since 1987, will make rear combination lamps.

Increasingly stiff competition from a former partner forced
CENTRAL MOTOR WHEEL CO., LTD. to reorganize its U.S. production
operations. It merged CENTRAL MANUFACTURING CO., a Paris, Kentucky
producer of steel and aluminum wheels, and wholly owned CENTRAL LIGHT
ALLOY CO., a maker of aluminum wheels located in the same town, into
CENTRAL MOTOR WHEEL OF AMERICA INC. In business since 1988, CMC
initially was owned by Central Motor Wheel (40 percent), TOYOTA
TSUSHO CORP. (20 percent) and what now is HAYES LEMMERZ INTERNATIONAL
INC. The big Northville, Michigan wheel manufacturer eventually sold
its shares in CMC to Central Motor Wheel, freeing it to go
head-to-head with that company. The new Central Motor Wheel of
America expects to produce 550 million wheels this year, including
520 million steel products, and to generate revenues of $168.6
million. For 2003, it is projecting output of more than 580 million
wheels.

OHI SEISAKUSHO CO., LTD., which is trying to lessen its dependence
on business from majority shareholder NISSAN MOTOR CO., LTD., has in
hand its first order from GENERAL MOTORS CORP. Other than saying that
the contract involved trunk latches and that shipments would start in
2001, Ohi released no details about the order. The parts will be made
by OHI AUTOMOTIVE OF AMERICA CORP., which has manufactured such
products as door hinges, hood, door and trunk latches, and seat
adjusters for the last decade in Frankfort, Kentucky and, more
recently, in Winchester, Kentucky.

Wholly owned SYNTEC, INC. of High Point, North Carolina is the
latest U.S. manufacturing company set up by big automotive seating
supplier TACHI-S CO., LTD. The venture was launched to fill an order
from THOMAS BUILT BUSES, INC., headquartered as well in High Point,
for seats for 15,000 school buses starting in January 2001. Tachi-S
will spend $15 million on the Syntec factory, which will be located
adjacent to Thomas Built Buses' plant. That will allow the major bus
manufacturer to drive the buses next door after assembly for seat
installation and then bring them back to its plant. The Syntec
contract reportedly is the first time that Thomas Built Buses, which
has about 30 percent of the school-bus market but also produces other
types of buses, has outsourced any of its work. Syntec will have a
work force of 60 when full-scale operations begin next year. For the
year through March 2003, the company is forecasting sales of $20
million. Long established in the United States, Tachi-S is a partner
in three separate production ventures that deliver seating systems to
vehicle manufacturers and Tier 1 parts suppliers.

The decision by major bearing manufacturer NSK LTD. to sell its
seatbelt unit to Sweden's AUTOLIV INC., already the number two in
this field worldwide, affects operations in North America with an
annual turnover of $70 million as well as businesses in Japan and
Thailand. NSK has a seatbelt technical center in Bloomfield Hills,
Michigan and a factory in Tijuana, Mexico. Autoliv is scheduled to
take over these activities April 1. NSK and Autoliv have had a
decade-long relationship on seatbelts in North America. In 1990, they
opened an equally owned venture in San Diego, California to backstop
the Tijuana factory.

KAWASAKI HEAVY INDUSTRIES, LTD. is projecting a significant
expansion in FY 2000 in the volume of parts for aircraft auxiliary
power units that it ships to HONEYWELL INTERNATIONAL INC. Through a
long- standing partnership with the former AlliedSignal Inc., which
in December merged with Honeywell Inc. to form Honeywell
International, KHI is in charge of such APU parts as first-stage
turbine blades for auxiliary power units installed on the A320 family
of aircraft built by AIRBUS INDUSTRIE S.A. and on BOEING CO.'s
current-generation 737 twin-jet series. In the year through March
2001, KHI expects to deliver to Honeywell International APU parts for
470 planes versus 330 planes in FY 1998.

MISCELLANEOUS

In a major boost for its aerospace business, MITSUBISHI HEAVY
INDUSTRIES, LTD. is partnering with BOEING CO.'s Rocketdyne
Propulsion & Power unit to design and develop a new liquid
oxygen/liquid hydrogen second-stage engine for the next generation of
expendable satellite launch vehicles. Their goal for the code-named
MB-XX engine is to engineer a high-efficiency, affordable and
low-risk propulsion system. The first MB-XX derivative, the MB-60, is
an engine with 60,000 pounds of thrust that Boeing plans to use for
its Delta IV booster beginning in 2004. MHI brings considerable
expertise to the project since it was the prime contractor for
Japan's H-II rocket, which used a cryogenic propulsion system to
power both of its two stages, and it has the same position on the
derivative H-IIA project. Japan's top aerospace company will be in
charge of developing the MB-XX engine's combustion chamber and
control devices. It expects this effort to cost around $45.9 million.
For its part, Rocketdyne, which has supplied the rocket propulsion
systems for virtually every major U.S. space program, will work on
the MB-XX's turbo pumps, nozzle skirts and other components and will
be the engine's integrator.

MITSUI COMTEK CORP. of Saratoga, California joined a number of
venture-capital firms in making an investment described as major in
COLLABRIA, INC. The Menlo Park, California start-up is the developer
of the Print Commerce solution, an Internet-based set of work-flow
tools that automate the process of buying, managing and producing
printed materials. The investment is part of a deal reached by MITSUI
& CO., LTD. to form a business and technology alliance with
Collabria. Under it, the trader will market Print Commerce to the
huge Japanese printing industry as well as provide system
localization and technical support.

Fast-expanding INTERNET RESEARCH INITIATIVE, INC., which provides
engineering and management advice to corporations, among other
Internet-re-lated services, has a U.S. subsidiary. The main job of
New York City-based IRI, INC. is to forge tie-ups with American
start-ups in the Internet support field. Of particular interest are
application service providers. IRI also will be on the lookout for
investment opportunities.

Economic data-base compiler IBJ-NIKKO INFORMATION SYSTEMS, LTD.
has tied up with FACTSET RESEARCH SYSTEMS, INC. The Greenwich,
Connecticut company is a major supplier of on-line integrated
financial and economic information to financial services providers
around the world. Under the agreement, FactSet will have access to
IBJ-Nikko's INDB, which provides 14,000 data series extending back to
1950 and updated daily relating to economic, industrial and financial
developments in Japan. IBJ- Nikko hopes to make similar arrangements
with other foreign firms that operate integrated, on-line information
systems.

Through its primary U.S. subsidiary, ITOCHU CORP. made a $10
million investment in NEWTON SENIOR LIVING in the form of a
convertible preferred equity interest. The Needham, Massachusetts
company is one of New England's largest owners, developers and
managers of housing for senior citizens. NSL will use the Itochu
money for current project development and operating capital. The
trading company, which provided financing for two of NSL's early
assisted-living facilities, has the option to inject another $10
million into the company. That is likely to occur in the third
quarter. NSL and its partner plan to explore the possibility of
bringing the U.S. firm's senior-living concept to Japan.

American Companies in Japan

CHEMICALS

A Houston company that operates a global Internet-based exchange
for buying and selling commodity chemicals, plastics and fuel
products in bulk established an office in Tokyo. Through a local
presence, CHEMATCH.COM hopes to sign up more Japanese companies as
members. At present, 125 or so firms worldwide participate in the
CheMatch.com marketplace, which is open for trading 24 hours a day,
seven days a week.

In exchange for $2 million in cash plus future milestone and
royalty payments, QUESTCOR PHARMACEUTICALS, INC. gave DAINIPPON
PHARMACEUTICAL CO., LTD. an exclusive worldwide license to use its
ppGpp Degradase and Peptide Deformylase technology in the development
and commercialization of drugs. In January 1998, the Japanese firm
had partnered with one of two firms that merged late last year to
form Questcor. Under that three-year agreement, the pair applied the
ppGpp Degradase and Peptide Deformylase technology to the discovery
and the development of antibacterial compounds. After two years,
Dainippon Pharmaceutical wanted to become more involved in the work,
but as part of the deal creating Questcor, it was decided that the
Hayward, California company would change the thrust of its
activities. Licensing the research technology to Dainippon
Pharmaceutical resolved the conflicting goals of the partners.

INTERNATIONAL BUSINESS MACHINES CORP. gave major photoresist
supplier JSR CORP. the right to commercialize its deep ultraviolet
bilayer resist technology. The JSR product, known as EIRIS, short for
enhanced integrated resist imaging system, should be available in
sample quantities in May. It consists of a silicon-containing resist
that imparts high etch resistance and a thick antireflective coating.
In what surely is music to the ears of industry executives, the
Japanese manufacturer promises that EIRIS will allow semiconductor
makers to turn out the next generation of ever-smaller and more
complex chip designs using their existing production equipment. The
alternative is to buy expensive lithography equipment like high
numerical-aperture steppers to produce devices with finer line
geometries. Commercial production of EIRIS is expected to begin in
2002 at one of JSR's domestic plants and at the Sunnyvale, California
factory operated by its U.S. subsidiary.

COMPUTERS AND PERIPHERALS

Industry sources report that within the next year or so,
COMPAQ COMPUTER CORP.'s subsidiary will assemble locally all of its
products targeted at the corporate market in Japan rather than import
them from Singapore. Sales to business buyers represented roughly 70
percent of the 450,000 or so units that the company shipped in 1999.
Local production on a build-to-order basis will start this summer
with the Deskpro line of corporate desktop machines, followed late
this year by the ProLiant/Prosignia series of servers and then the
Armada family of corporate notebooks. This sourcing shift had been
expected to take place soon after the October 1998 merger of Digital
Equipment Corp.'s subsidiary into Compaq's since DEC had a recently
renovated plant in suburban Tokyo. The switch did not occur at the
time presumably because production in Japan is more expensive than in
Singapore. However, Compaq now apparently has decided that the big
cut in delivery times made possible through local BTO production is
worth the higher costs, which, in any case, will be passed on to
corporate buyers.

The only products that COMPAQ COMPUTER CORP. will continue to
import are its home-oriented Presario desktop and notebook systems
since buyers rarely want them customized. Starting this month,
Presario PCs can be ordered from Compaq DirectPlus, the company's
on-line store. Until now, these models have been available only at
stores through an exclusive distribution deal with CANON SALES CO.,
INC. The addition of Presarios to Compaq DirectPlus means that all
the company's servers and corporate and consumer desktop and notebook
PCs can be bought through the Internet. This marketing channel
generated about 5 percent of Compaq's 1999 volume. It is gunning to
raise this figure to as much as 15 percent in 2000.

Add three more names to the already extensive list of firms that
have decided that it is cost-effective over the long run to outsource
responsibility for their computer systems to IBM JAPAN LTD. One of
the latest converts is DAISHI BANK, LTD., a Niigata prefecture
regional bank. Starting in April, IBM Japan through the local unit of
its parent's IBM Global Services group will take over operation of
the bank's IT systems under a 10-year deal worth about $270.2
million. Major candy and snack food maker MEIJI SEIKA KAISHA, LTD.
also decided to hand over to IBM Japan management and maintenance of
the computer system that it uses for production planning and
accounting. The company figures that the five-year outsourcing
agreement will save it as much as $917,400 annually. For its part,
PIA CORP., a ticket distributor and publisher, contracted with IBM
Japan to handle systems development and management from this spring.
As part of the arrangement, the computer giant will integrate Pia's
existing equipment using IBM hardware and software.

IBM JAPAN LTD. should get some help this summer in handling its
bigger outsourcing business. Under a tentative agreement with
MITSUBISHI CORP., the two will share responsibility for running the
data center owned by the trader's IT COMMERCE CORP. subsidiary. This
will enable IBM Japan to shift some of its existing accounts over to
this facility, freeing resources at its own nearby data center to
manage the IT requirements of new clients. The Mitsubishi-IBM Japan
relationship also will include cooperation in the areas of sales,
planning and systems development.

In a move designed to upgrade technical support for users of its
Netfinity PC servers, IBM JAPAN LTD.'s Web site will be deployed to
troubleshoot problems. On it, the company will post 6,000-plus pieces
of information culled from a data base of responses to questions
asked of its parent's worldwide customer service departments. In most
cases, IBM Japan hopes, users of the system can get step-by-step
instructions for resolving problems once a description of them is
entered. Responses via e-mail also will be available. The company
thinks that the new service will be more effective than support via a
help desk because of the frequent difficulty of explaining in detail
the technical problems that servers encounter.

Under their recently announced e-business/net-working
collaboration (see Japan-U.S. Business
Report No. 365, February 2000, p. 15), the
subsidiaries of INTERNATIONAL BUSINESS MACHINES CORP. and CISCO
SYSTEMS, INC. will offer services to small and midsize customers in
addition to members of corporate Japan, their original focus. The
menu is much the same for the two groups of companies, centering on
systems construction and support. The main difference is on the
hardware side. For small and midsize firms, IBM JAPAN LTD. and Cisco
Systems are promoting the Netfinity PC server and the networking
equipment leader's firewall-equipped desktop routers. For big firms,
they are pairing IBM's S/390 mainframe-cum-Web-server with Cisco
Systems' high-end networking equipment.

In a tie-up that should help DELL COMPUTER CORP.'s subsidiary
extend its market reach from the office to the factory floor, it and
YOKOGAWA ELECTRIC CORP. will offer systems integration services to
manufacturers interested in improving efficiency by combining their
production, information and management systems. Dell brings to this
endeavor not only its lineup of PCs and servers but also its
integration expertise. Industrial automation leader YEC, which has
made expansion of IT services a prime business objective, affords
access to a large customer base. To be supported by a dedicated team
at each company, the partnership is scheduled to be launched this
spring.

DELL COMPUTER CORP.'s marketing unit has a new way to reach
Japan's vast number of small and midsize companies. It was named the
exclusive computer supplier for NTT DATA OFFICE MART CORP.'s orderit
membership office-supply site. When any of the 12,000 or so member
firms click on the PC icon on the orderit home page, they will be
linked to a special Dell site. Until now, equipment from a number of
computer manufacturers was available on orderit, but NTT Data Office
Mart decided to go with one maker to facilitate delivery and service.

Two of Japan's top PC distributors  CANON SALES CO., INC.
and DAIWABO INFORMATION SYSTEM CO., LTD.  will market
HEWLETT-PACK-ARD JAPAN LTD.'s all-in-one OmniBook XE2 (see
Japan-U.S. Business Report
No. 364, January 2000, p. 15) and its high-end OmniBook
4150 notebook computer. The company decided to abandon its direct
sales approach for these two products in the hope of making headway
in the corporate market. That, in turn, is related to its goal of
ranking among the 10 largest notebook sellers by 2002. Despite
handing over the two models, HP Japan will work closely with Canon
Sales and Daiwabo Information System in devising marketing, sales and
advertising strategies.

IBM JAPAN LTD. has released more details about its plans for the
subsidiary of SEQUENT COMPUTER SYSTEMS, INC., now an INTERNATIONAL
BUSINESS MACHINES CORP. company (see
Japan-U.S. Business Report
No. 364, January 2000, p. 14). This month, IBM Japan
will form a Web server unit by combining its Unix server division
with the local operations of Sequent, a leader in systems based on
the NUMA (non-uniform memory access) architecture. It allows large
numbers of processors (up to 64 in the case of the Beaverton, Oregon
company's products) to operate as a single system while being
relatively easy to program and manage. IBM Japan plans to market for
e-business applications Unix servers that incorporate Sequent's
technology. These machines also will be the platforms for the
implementation of Project Monterey, an IBM-led initiative to develop
a high-volume, enterprise-ready commercial Unix operating system that
supports both the IBM and the Intel architectures.

In the meantime, IBM JAPAN LTD. added to its Unix-based RS/6000
family of 64-bit RISC (reduced instruction-set computing)
workstations and servers the first models featuring the new POWER3-II
processor with its heat-lowering, performance-improving copper
interconnects. The entry-level RS/6000 44P Model 170 workstation,
priced from just $25,600, uses the 400-MHz version of the chip. It
comes with 256 MB of system memory expandable to 2 GB, 9.1 GB of
storage capacity that can be boosted to 72.8 GB, plus two 64-bit PCI
(peripheral component interconnect) slots and four 32-bit PCI slots.
For more demanding CAD/CAM (computer-aid design and manufacturing)
functions, IBM Japan has the RS/6000 44P Model 270 workstation, which
can handle one to four 375-MHz POWER3-II processors. All four
configurations can be equipped with anywhere from 256 MB of internal
memory to 8 GB shared and a disk drive capacity of 9.1 GB to 54.6 GB.
A pair of 64-bit PCI slots and three 32-bit PCI slots are standard.
Pricing for this model starts at $32,000. The top-of-the-line RS/6000
SP server also is available with up to four 375-MHz POWER3-II
processors for $107,300 and up.

Returning to the price-sensitive part of the Unix workstation
market, HEWLETT-PACKARD CO. introduced worldwide the HP VISUALIZE
B2000. Targeted at cost-conscious electronic design automation and
mechanical design automation engineers and designers, the workstation
features the new HP VISUALIZE fxe three-dimensional graphics
subsystem. Its power comes from a 400-MHz version of HP's PA-8500
RISC processor. HEWLETT-PACKARD JAPAN LTD. priced the HP VISUALIZE
B2000 at $11,700. As with similar products, it is supplying the
system on an original equipment manufacturer basis to HITACHI, LTD.
and OKI ELECTRIC INDUSTRY CO., LTD.

Strengthening its lineup in the expanding Windows/Intel
workstation and server markets as well as in their Unix counterparts,
IBM JAPAN LTD. rolled out new IntelliStation workstation and
Netfinity 5000 server models. The high-end IntelliStation Z Pro now
is available with a 733-MHz Pentium III Xeon processor for $5,500 or
an 800-MHz version of this engine for $12,700. The former comes
standard with 256 MB of PC 600 direct Rambus DRAM memory, a 9.1-GB
hard drive spinning at 10,000 rpm and an ELSA GLoria II graphics
accelerator, while the latter ships with 512 MB of PC 600 RDRAM, a
10,000-rpm 18.2-GB hard drive and Intense-3D Wildcat 4110 graphics.
For technical users on a tighter budget, IBM Japan introduced new
Pentium III-equipped IntelliStation M Pro products starting at
$3,700. At the same time, the company made the Netfinity 5000 server
family more powerful by adding models that run off the 650- MHz and
the 700-MHz versions of the Pentium III processor. These Windows NT
Server 4.0 products are priced at $4,500 and $5,000, respectively.

ISPs and data center operators trying to fit ever-increasing
numbers of servers into their facilities are the target buyers for
IBM JAPAN LTD.'s rack-optimized Netfinity 4000R server. Measuring
just 1.75 inches thick, 42 of these units can be stacked in an
industry-standard rack. One or two Pentium III processors running at
either 650 MHz or 750 MHz power this model, which has 18.2 GB of disk
storage. A Netfinity 4000R with a pair of 750-MHz Pentium IIIs starts
at $9,100.

COMPAQ COMPUTER CORP. merged its two server brands, dropping the
Prosignia label and keeping the ProLiant name. To mark this switch,
it introduced three products in the new, expansion-oriented ProLiant
ML line. The entry-level ProLiant ML350, the replacement for the
ProLiant 800 and the Prosignia Server 740, is aimed at growing small
and midsize businesses looking for a value-priced server. Starting at
$3,700, it uses either a 600-MHz or a 733-MHz Pentium III. The
ProLiant ML370, the next generation of the ProLiant 1600 and 1600R,
is designed for remote and branch office requirements. It offers the
choice of a 667-MHz or a 733-MHz Pentium III. For companies needing
speed, extensive scalability and high- availability features, Compaq
is marketing the ProLiant ML530 as the follow-on to the ProLiant 3000
and 3000R. This system can draw on the power of two 800-MHz Pentium
IIIs.

Beefing up its presence in the departmental server market, DELL
COMPUTER CORP.'s subsidiary introduced the new PowerEdge 4400. This
system provides improved availability through redundant, hot-
plug-gable components and support for RAID (redundant array of
independent disks). On the performance and scalability sides, the
PowerEdge 4400 supports up to two Pentium III Xeon processors
operating at 600 MHz to 800 MHz with a 133-MHz front-side bus, 128 MB
to 4 GB of 133-MHz SDRAM memory and 9 GB or 18 GB of high-performance
storage. The base configuration of the PowerEdge 4400 lists for
$4,600.

The answer from DELL COMPUTER CORP. to both the space constraints
of ISPs and data center managers and their requirements for
performance and uptime is the PowerEdge 2450. This rack- mountable,
dual processor-capable server is 3.5 inches high. Twenty-one of them
therefore can fit in a seven-foot rack. If each has the maximum 91 GB
of internal storage, the user has as much as 2 terabytes of capacity
available. Performance is provided via Pentium III processors
operating at 600 MHz to 733 MHz, plus as much as 2 GB of system
memory. PowerEdge 2450 pricing begins at $3,300.

According to calculations by HEWLETT-PACK-ARD JAPAN LTD., the
combination of performance and reliability delivered by the new HP
NetServer LH 3000/3000r will enable it to sell 25,000 of these
departmental servers in a year. The system can be configured with one
or two Pentium III processors running at 600 MHz all the way up to
933 MHz, each with a 133-MHz front-side bus. Performance is bolstered
by 133-MHz SDRAM internal memory. To ensure availability, the $8,100
and up HP NetServer LH 3000/3000r comes with
hot-swappable/hot-pluggable disk drives and other components.

The corporate desktop market in Japan is hot and, like their
Japanese counterparts, American PC suppliers are rolling out new
products one after the other to exploit this demand. A number of
these models are the launch vehicles for the Windows 2000
Professional operating system. For instance, world industry leader
COMPAQ COMPUTER CORP. has installed the new operating system in at
least one model in its four Deskpro lines: the value-oriented Deskpro
EP Series, the performance-geared Deskpro EN Series Desktop for
connected offices, the Deskpro EN Series Small Form Factor and the
Deskpro EN Series Minitower. At a minimum, these machines, which
start as low as $2,000, come with a 600-MHz Pentium III processor,
128 MB of internal memory and 10 GB of disk capacity.

For IBM JAPAN LTD., the Windows 2000 Professional launch model is
part of the company's mainstream PC 300GL series, which now can run
off Pentium III processors up to 800 MHz with a 133-MHz front-side
bus. The Windows 2000-ready PC 300GL Model 6564, a tower design,
lists for $2,600.

In quick order, the subsidiary of direct marketer GATEWAY, INC.
expanded its new Select family of performance-oriented yet
value-priced desktop PCs upwards. At the heart of the line is the
Athlon chip with Enhanced 3DNOW! technology from ADVANCED MICRO
DEVICES, INC. (see Japan-U.S. Business
Report No. 365, February 2000, p. 16). As its name
suggests, the Select 850 is powered by a 850-MHz implementation of
the processor. It comes with 128 MB of system memory, 20 GB of disk
storage and a 19-inch monitor for just $1,900.

HEWLETT-PACKARD JAPAN LTD. is trying to capitalize on the strength
of the corporate PC market by selling through its on-line Business
Store nine low-price HP Vectra models. The entry-level product, the
HP Vectra VLi7, costs as little as $730 without a monitor. That buys
a machine with a 500-MHz Celeron processor, 64 MB of internal memory
and an 8.4-GB hard drive. The line's four HP Vectra VLi8 models have
the same memory and disk capacity but offer additional features, such
as integrated LAN (local area network) capability, a 600E-MHz Pentium
III processor and, in the high-end, roughly $1,400 model, Windows NT
4.0. Rounding out this series is the HP e-Vectra, the first products
in HEWLETT-PACKARD CO.'s new family of e-PCs. These modular machines,
which have a removable hard drive, power supply and chassis, are
one-fifth the size of traditional desktop PCs. Ranging in price from
$815 to almost $1,200 (without a monitor), the HP eVectra PCs offer a
choice of a 500-MHz or a 533-MHz Celeron or a 600EB- MHz Pentium III
and 64 MB or 128 MB of system memory; an 8.4-GB hard drive is
standard. The high-end HP e-Vectra comes preloaded with Windows 2000.

The three-model Optiplex GC series is DELL COMPUTER CORP.'s latest
entry in the space-saving corporate market. Designed for networked
environments, these products have an ultrathin chassis that is
claimed to be 38 percent thinner than today's slim chassis. Inside is
either a Celeron processor running at up to 500 MHz or a Pentium III
with speeds as fast as 800 MHz combined with an 810E chipset, plus
SDRAM or RDRAM memory expandable up to 512 MB. An Optiplex GC model
equipped with a 500-MHz Celeron costs just under $1,100.

DELL COMPUTER CORP. also hopes that a space-saving design and
cut-rate pricing will help it make headway in the SOHO and home
markets. Its subsidiary is offering the Japan-only Dimension J433c
desktop machine with a 433-MHz Celeron processor for just $595
excluding a monitor and the similarly localized Inspiron C433ST
notebook, which uses the mobile version of the same chip, for only
$1,600.

Chief rival COMPAQ COMPUTER CORP. also is deploying the pricing
weapon to build sales in the home market. Its stylish Presario 3500
Series of desktop PCs costs as little as $730 without a monitor for a
system powered by a 466-MHz Celeron processor, although the line
extends up the performance ladder to a machine with a 550-MHz Pentium
III and a CD-RW drive. For the mobile computer user, Compaq rolled
out the all-in-one Presario 1600 Series for people interested in
performance, which is delivered via mobile Celeron or mobile Pentium
III processors, a 14.1-inch TFT LCD display and a DVD-ROM drive. For
budget- conscious buyers, it introduced the Presario 1200 Series,
which uses a 475-MHz version of the AMD-K6- 2 engine and comes with a
13-inch TFT LCD display. All of the new Presario models feature
Compaq's Internet-access button. It instantly links users to the home
pages of 11 local content providers.

Demanding professionals can access the benefits of the Windows
2000 Professional operating system in the office or on the road if
they have IBM JAPAN LTD.'s new ThinkPad 600X. This 5-pound notebook
uses the latest mobile Pentium III processors with SpeedStep
technology and provides 64 MB of SDRAM expandable to 576 MB, a 12-GB
hard disk drive and a 13.3-inch TFT LCD display with XGA resolution.
Pricing of the ThinkPad 600X starts at $3,900. The new Windows
operating system also is preloaded with the ThinkPad 570E. This
$3,400 and up portable capitalizes on a 500-MHz mobile Pentium III
processor, 64 MB to 320 MB of SDRAM, 12 GB of storage and the same
display as the ThinkPad 600E.

COMPAQ COMPUTER CORP. enhanced the performance of two members of
its Armada line of commercial notebooks  the ultraportable
Armada M300 and the all-in-one Armada E500. The former, which
supports the Microsoft 2000 Professional operating system, now is
powered by a 500-MHz mobile Pentium III processor and includes a
12-GB hard drive and a 11.3-inch XGA TFT display. The latter draws on
the performance features of the 450-MHz implementation of the mobile
Pentium III chip. Equipped with 64 MB of RAM, a 12-GB hard drive and
a 14.1-inch TFT LCD, the Armada E500 goes for $2,500.

Under a multiyear OEM contract, NETWORK COMPUTING DEVICES, INC. is
developing and manufacturing thin-client terminals for HITACHI, LTD.
Targeted at the ASP market, the FLORANET 130 is based on the Mountain
View, California company's ThinSTAR 400 Windows-based terminal. This
product uses a 166-MHz Pentium MMX processor and provides 32 MB of
internal memory expandable to 288 MB. It also includes a pair of
serial ports, one parallel port, two USB ports and 16-bit audio
input/output. A localized version of NCD's ThinPATH Management
Service operating system ships with the FLORANET 130. Hitachi already
is selling the thin client for Windows NT server environments, but it
will make a major marketing push now that Windows 2000 has been
launched in Japan. The Japanese manufacturer said that it chose NCD's
product because of its small footprint, manageability features and
interoperability with Hitachi servers.

While most PC manufacturers were tweaking their hardware or
marketing strategies, an on-the-roll-in- Japan APPLE COMPUTER, INC.
was unveiling in Tokyo new iBook, PowerBook and Power Mac G4 lines
for the world market. The revamped iBook portable for the personal
user has double the memory (64 MB) and twice the storage capacity (6
GB) of its predecessor, but the price is the same $1,800 for these
blueberry and tangerine models with their 300-MHz PowerPC G3
processor. Apple also used the occasion to debut the $2,000 iBook
Special Edition, which uses a 366-MHz processor and comes in a
graphite-color enclosure. The new PowerBook portables for the
business user incorporate faster PowerPC G3 processors. About $2,700
will buy a system with a 400-MHz chip, 64 MB of internal memory and a
6-GB hard drive. For roughly $1,000 more, professionals can get what
Apple claims is the fastest portable ever. This PowerBook uses a
500-MHz PowerPC G3 processor. It also provides 128 MB of system
memory and 12 GB of storage capacity. Both new PowerBook models
feature as well up to 10 hours of battery life and two built-in
FireWire (IEEE 1394) ports. For desktop customers, Apple beefed up
the performance of the Power Mac G4 line with Velocity
Engine-equipped PowerPC G4 processors running at 400 MHz, 450 MHz and
500 MHz. These machines range in price from $1,800 to $3,900.
According to Apple's calculations, it had 7.8 percent of Japan's
PC-like market in last year's fourth quarter, making it number four.
The company attributed its gain mostly to the popularity of the iBook
and the iMac home desktop computer.

In a deal that could extend its business from desktop products to
the portable market, big magnetic recording head manufacturer
READ-RITE CORP. has a contract with FUJITSU, LTD. to develop advanced
GMR (giant magneto-resistive) recording heads for 2.5-inch disk
drives used in laptop computers. The storage requirements of this
market will showcase the Milpitas, California firm's breakthroughs in
areal density by packing more data into a square inch of platter
space. Read-Rite already has shipped samples of its GMR heads to
Fujitsu, which is one of the world leaders in 2.5-inch drives for
portables.

The first of TROIKA NETWORKS, INC.'s innovative Fibre Channel
solutions for managing the burden that e-commerce and e-business put
on the corporate data-storage infrastructure is available through
NIS- SHO ELECTRONICS CORP. (see
Japan-U.S. Business Report
No. 362, November 1999, p. 18). The SAN2 Controller
2000 is a PCI-to-Fibre Channel adapter that enables network managers
to support and administer storage area networks and/or what the
Westlake Village, California supplier calls system area networks with
a single device. Nissho Electronics priced the Troika Networks board
at $5,000. It is projecting first-year sales of this and other
products from the start-up at $917,400.

The seemingly insatiable demand for storage capacity in today's
increasingly networked corporate world is creating a ready market in
Japan for what are called network-attached storage devices. The
latest company attempting to exploit this demand is disk-drive maker
MAXTOR CORP. It named NISSHO ELECTRONICS CORP. and NEWTECH CO., LTD.
to distribute its MaxAttach NAS server appliances. They plug directly
into the network in less than 10 minutes, according to the Milpitas,
California company, and can be easily managed, configured and
administered via a Web browser. Equally important, Maxtor says,
MaxAttach devices, which offer 18 GB to 72 GB of storage, maintain
fast response times despite increases in traffic. Nissho Electronics
priced the appliance at $1,700. It is forecasting yearly sales of
10,000 MaxAttach devices and accompanying ReflectIt automatic backup
and instantaneous data-mirroring software.

PROCOM TECHNOLOGY INC., which bills itself as a pioneer in the
development of NAS technology, also jumped into Japan's market for
this appliance. The Santa Ana, California company tapped TECHNOGRAPHY
INC., a Tokyo-based provider of storage solutions, to resell and
support the full line of NetFORCE products. Among their touted
benefits is built-in software support for kanji, which enables users
to set up and manage the devices in Japanese. Others include
NetFORCE's seamless integration into all major networking
environments and fault tolerance.

Like several of its American PC rivals, GATEWAY, INC. has moved
into the enterprise storage market. The first product offered by its
subsidiary is the $3,500 DataStation 8-U2 device for use with the
company's high-end ALR servers. The external system stores 288 GB of
data. Three of them can be linked together for a theoretical capacity
of 864 GB. The data transfer rate is a brisk 80 megabits per second.
The DataStation 8-U2 also incorporates a number of high-availability
features, such as dual swappable power supplies.

The marketing arm of IMATION CORP.  one of the developers of
the SuperDisk, which holds 120 MB of data on a 3.5-inch diskette
 released a USB-compatible version of its SuperDisk drive for
machines running Windows 98 and Windows 2000 as well as recent
versions of the Macintosh operating system. Like similar Imation
products, the SDD-120USBSL-B/T can read conventional 3.5-inch
floppies along with high-capacity SuperDisks and at much faster
speeds than floppy drives. The blueberry- or tangerine-color drive
lists for $265.

In a major endorsement of its flash-based local storage solutions
for the Internet appliance market, M-SYS- TEMS FLASH DISK PIONEERS
LTD.'s DiskOnChip is part of the INFOX terminal commercialized by
TOSHIBA TEC CORP., the top Japanese supplier of point-of-sale systems
to supermarkets and convenience stores. The INFOX terminal is an
integrated e-commerce system designed to handle card- credit,
debit-card, IC-card and other types of payments at retailers
participating in NTT DATA CORP.'s INFOX-NET network service. Newark,
California-based M-Systems' DiskOnChip serves as the INFOX terminal's
Windows CE boot device and provides local storage of such files as
systems applications, drivers and credit transaction data. It also
stores the INFOX's built-in TCP/IP (transmission control
protocol/Internet Protocol) networking feature used to connect with
the NTT Data network.

Two U.S. companies that specialize in putting any type of digital
content  graphics, photos, sound or video  on CDs or the
like that are the size of business cards are stepping up efforts in
Japan in support of this new marketing tool. The local office of
SQUARECD INC., which first offered CD-ROM business cards and then
this message-sending medium on recordable CDs, is taking orders for
DVD-ROM business cards. The SquareDVD, expected to cost $7.35 each,
has a 400-MB capacity. The orders are filled at SquareCD's Keizer,
Oregon plant, which can turn out 500,000 DVD cards a month. For its
part, IACCESS.COM is marketing through its subsidiary the CD-ROM
iAccessCard. This spring, the Bluffdale, Utah company also will offer
its product as a DVD-ROM. Both SquareCD and iAccess.com will create
multimedia sales, training and other material for clients or use
customers' presentations.

In its latest diversification, COMPAQ COMPUTER CORP.'s marketing
arm introduced a hardware-based solution that addresses the system
throughput and performance bottlenecks created as secure servers
handle more and more transactions encrypted according to the SSL
(secure socket layer) protocol to ensure privacy and security over
the Internet. The Compaq AXL200 Accelerator PCI Card tackles this
problem by offloading all the compute-intensive exponentiation
processing required by the SSL protocol. That frees servers to run
primary business applications, whether home banking, on-line stock
trading or e- commerce purchases.

CONSTRUCTION AND REAL ESTATE

The only company authorized by the Ministry of Construction to use
steel framing in commercial or residential construction is embarked
on a major expansion effort. Los Angeles-headquartered AMERICAN
SILVERWOOD, INC. has worked in Japan since 1995, but it has found the
going slow despite the cost, strength and fire-protection advantages
of steel framing over American-style wood framing and especially over
traditional Japanese construction techniques. To promote the use of
steel framing in home-building, American Silverwood's subsidiary is
tying up with 13 companies around the country. These distributors
will cultivate relationships with local architects and contractors
and license the U.S. firm's construction technique to interested
parties. The American Silverwood affiliate also is forming a business
development unit to make further inroads in the commercial
construction field. It already has contracts from SKYLARK CO., LTD.,
Japan's top family-style restaurant chain, and two convenience store
operators to build steel- framed outlets for them. American
Silverwood thinks that it could build as many as 150 commercial
facilities this year.

One of the largest commercial property managers in the United
States is moving into the Japanese market. New York City's CUSHMAN
& WAKEFIELD, INC. expects to have a 15-person subsidiary
operational by early summer. Initial plans call for the staff to
advise clients on the efficient use of space. They also will suggest
ways that clients can boost property values that took a beating in
the 1990s from the collapse of the asset "bubble." Recommendations on
real estate investments are on Cushman & Wakefield's Japan agenda
as well.

KENNEDY-WILSON, INC., one of the most active foreign real estate
investors in Japan, added two office buildings with a combined value
of $36.7 million to its portfolio. One property is in Yokohama. Its
86,000 square feet of space are fully leased. The other, an office
building in central Tokyo with 27,000 square feet of rentable space,
is 89 percent leased. For the near term at least, Kennedy-Wilson
plans to continue to purchase buildings with strong cash flows and to
hold these properties for five years or so. Given its use of low-cost
nonrecourse yen debt, the Los Angeles-headquartered international
real estate services business calculates that it can earn
approximately 20 percent a year on its equity investments in Japanese
buildings.

ELECTRIC MACHINERY

The Japanese appliance market, especially the home end of the
business, has been tough on American competitors, even those teaming
with a local company. That track record has not deterred MAYTAG CORP.
The number-three U.S. appliance manufacturer has forged a three-part
alliance with SANYO ELECTRIC CO., LTD. One thrust is joint
development of major home appliances and floor-care products for
cooperative marketing in Japan and elsewhere in Asia. Laundry and
floor-care products as well as new cooking technologies already are
on their list, but the new partners expect their first project will
involve work on a high-efficiency washing machine for home use.
Another facet of the alliance is mutual product supply. Under this
part of the agreement, Sanyo Electric initially will distribute
Maytag-brand high- efficiency commercial laundry equipment in Japan.
In addition, Maytag and Sanyo Electric, itself a big supplier of
appliances, will explore opportunities for joint purchases of parts
in order to reduce costs and enhance design efficiencies.

The world's first DVD-Audio disc is the result of a technical
collaboration between SONIC SOLUTIONS and PIONEER CORP. The new
format is said to deliver unprecedented sound resolution to the
listener. It also allows audio programming to be accessed
interactively and presented together with video material. To create
the DVD-Audio disc, Pioneer made use of Sonic Solutions'
software-based DVD-Audio production system, the only such product
available. The Novato, California firm's Sonic DVD Creator AV
includes SonicStudio HD, a system for high-density audio production,
and DVD Producer for authoring DVD Audio titles.

A B2B on-line marketplace for buyers and sellers of electronic
components in Japan and other Asian countries could be operational as
soon as the third quarter of 2000. Behind the initiative are
NEED2BUY.COM, INC., which has sponsored such an exchange for American
companies since May 1999, and MITSUBISHI CORP., a participant in the
first round of fund-raising for the Westlake Village, California
venture (see Japan-U.S. Business
Report No. 364, January 2000, p. 9). With
Need2Buy.com putting up 60 percent of the capital, the two formed a
company to develop a B2B e-commerce site that is based on the U.S.
partner's Internet technology but is tailored to the needs of Asia's
electronic components market. Under Need2Buy.com's current solution,
OEM buyers of electronic parts post requests for price quotes.
Distributors and manufacturers that have signed up with the site then
make bids, which the company's expert system screens for
compatibility with buyers' requirements.

As soon as this summer, HYPERCOM CORP., a Phoenix, Arizona-based
supplier of electronic payment solutions, could launch in Japan a
localized version of its Internet-enabled card-payment terminal for
retail point-of-sale locations. This product will combine the firm's
ePic Internet technology with its ICE family of interactive,
touch-screen terminals. In the United States, Hypercom touts the
revenue-enhancing services and the efficiency gains that
Internet-enabled terminals offer merchants in addition to their
traditional card-payment functions. Interestingly, the manufacturer's
subsidiary is promoting another benefit of the equipment: prevention
of credit-card fraud by retail employees. With the Hypercom Internet-
enabled terminal, the image of the receipt for a transaction appears
on the screen, and the customer signs it using an electronic pen.

Start-up EVERGREEN SOLAR, INC., a supplier of photovoltaic or
solar electric panels that is on the verge of ramping up to full
production, is moving into Japan, currently the world's largest
market for solar electric panels. Its exclusive marketing partner for
both residential and commercial applications is KAWASAKI HEAVY
INDUSTRIES, LTD. Evergreen Solar's String Ribbon polycrystalline
solar cells are notable for requiring only about half the amount of
silicon that competitors, whether Japanese or American, use. That
lowers the cost of the panels for either dispersed power applications
or complete power systems. In conjunction with the distribution deal,
KHI invested $5 million in the Waltham, Massachusetts company as part
of a fourth round of private financing that raised $18.4 million.

ENERGY RESOURCES

The regulatory freedom that independent power producers soon will
have to sell electricity directly to major customers as well as to
wholesale it to electric utilities has the interest of another
American company. INTERGEN, equally owned by SHELL GENERATING LTD.
and engineering and construction giant BECHTEL CORP., is talking with
MARUBENI CORP. about a tie-up to build and operate generating plants.
Using Boston-based InterGen's cost-saving technology for building
generation facilities and operating them, the prospective partners
figure that they can undercut the prices charged by Japan's 10
regional electric utilities by anywhere from 20 percent to 30
percent. TEXACO INC. (see
Japan-U.S. Business Report
No. 360, September 1999, p. 17) and ENRON CORP. (see
Japan-U.S. Business Report No. 365,
February 2000, p. 6) are among the other U.S. firms that
think that Japan's electricity market is ripe for competition from
outsiders.

FINANCIAL SERVICES

Every month, the managers of more U.S. venture capital funds
decide that money can be made in Japan. Among the latest believers is
SUN MICROSYSTEMS, INC. Its subsidiary will draw on the $200 million
investment fund that the major computer supplier set up in October
1999 to invest in 20 or so Japanese start-ups by the end of 2000. The
goal of the fund is to promote innovation by companies developing
products, markets and services based on Sun's technology and
platforms. These firms most likely will be Internet-related. Sun is
interested only in minority investment opportunities in
entrepreneurial ventures.

Another convert is ANDERSEN CONSULTING LLP. It is drawing on money
from two sources. One is a roughly $917.4 million private equity fund
for investors interested in early-stage Internet-related businesses.
About 10 percent of the fund will be earmarked for Japanese ventures.
Like other start-ups identified for financing, the recipients also
will receive managerial and other advice from Andersen Consulting's
Tokyo office. The big business consulting company also plans to
extend $1.2 billion in financial assistance over three years to
later-stage Internet firms around the world to help them expand their
business or go public. Again, some 10 percent of the money will be
invested in Japan. Andersen Consulting's aim here is to win new
clients for its services.

GENERAL ELECTRIC CO. certainly does not need to be sold on the
potential gains from investing in Japan since it already owns an
array of domestic financial services providers through its GE CAPITAL
CORP. Now, however, it is pursuing returns in a new area: Japanese
Internet start-ups. The $50 million E- Fund has been established for
this purpose. Managers are looking in particular for companies
providing the infrastructure for on-line securities trading and
e-commerce or other types of Internet systems. An additional target
is companies that run computer systems for other businesses.

On the heels of this announcement, GE CAPITAL CORP. agreed with
DAIWA SECURITIES SB CAPITAL MARKETS CO., LTD. and SUMITOMO CORP. to
establish a private equity fund (see
Japan-U.S. Business Report
No. 363, December 1999, p. 20). The partners initially
will capitalize it at $183.5 million, although they hope to raise an
additional $733.9 million from institutional and other investors.
Many of the details still need to be worked out, but the fund, which
could be set up as soon as April, will invest mainly in unlisted
companies and in operating divisions spun off from major companies.

Individual investors now have a free on-line source of timely
information on initial public offerings of stock by Japanese
companies. The service, called Tokyo IPO, is provided by BARGAIN
AMERICA CORP. It covers IPOs on all of Japan's securities exchanges
in both English and Japanese. Weekly commentaries on the local IPO
market also are available at Tokyo IPO's Web site as well as by
e-mail. San Jose, California- based Bargain America got its start in
Japan by selling over the Internet brand-name American products at
U.S. prices. That still is the firm's main business, but it also
publishes 11 e-mail newsletters in Japanese on a variety of subjects.

The first on-line debt trading system in Japan could debut by
December of this year. It will be backed by a joint venture between
EREORG.COM, INC. and MI-TSUBISHI CORP. The ereorg.com system enables
institutional investors to buy and sell debt in the secondary market
in an anonymous and secure environment. Analysts long have argued
that the absence of a robust secondary debt market in Japan is one
reason that it is taking domestic banks and other financial
institutions so long to dispose of their mountain of nonperforming
loans. The New York City firm's system should accelerate this process
by creating a more active and more liquid market. Transaction times
and settlement costs also should be reduced through the use of
standardized contracts and other documents. In connection with the
formation of the joint venture, MC CAPITAL INC., the New York City
merchant banking arm of Mitsubishi, invested an undisclosed amount in
ereorg.com.

BANK OF NEW YORK CO. plans to start operating in June the first
Internet-based foreign exchange trading system in Japan. iFX Manager,
which already is available in the United States and the United
Kingdom, handles all phases of the foreign exchange process for
institutional investors. Clients can manage transactions in multiple
currencies and also can hedge deals through currency futures. Bank of
New York will set up a round-the-clock system linking its Tokyo
branch, where local customers will place orders, to offices in New
York and London. In time, other banks will be allowed to use iFX
Manager.

In its latest move to gain clients for its on-line brokerage
services (see Japan-U.S.
Business Report No. 363, December 1999, p. 21),
DLJDIRECT SFG SECURITIES INC. opened a customer service center in
central Tokyo. It is the first Internet stock trader to have a
brick-and-mortar presence. Customer service representatives will
brief people about on-line trading, including how to operate a PC.
Interested investors also will be able to open brokerage accounts.
.....DLJDIRECT SFG SECURITIES INC. customers soon will have access to
a new high-return/high-risk product from GOLDMAN, SACHS & CO. The
investment vehicle, which represents the securitization of options on
some 50 Japanese stocks, is the first of a number of products for
individual investors that the big investment bank plans to offer
through on- line brokerage companies.

Now entering its second year of operations, NIKKO SALOMON SMITH
BARNEY LTD. is thinking expansion. The investment banking and
securities trading venture between CITIGROUP INC. and NIKKO
SECURITIES CO., LTD. (see
Japan-U.S. Business Report
No. 354, March 1999, p. 19) plans to add 100 or so
people this year to its 1,200-employee payroll to strengthen its
position in both investment banking and product development. The
company is especially interested in hiring more analysts to broaden
its coverage of publicly traded stocks.

All of the formalities have been completed for the first foreign
takeover of a big-name Japanese bank. At the start of March,
LONG-TERM CREDIT BANK OF JAPAN, LTD. will emerge from bankruptcy
under the ownership of NEW LTCB PARTNERS C.V., an international
consortium formed by RIPPLEWOOD HOLDINGS LLC (see
Japan-U.S. Business Report
No. 364, January 2000, p. 17). The investor group will
pay $9.2 million to acquire about 2.4 billion existing LTCB common
shares and will funnel another $1.1 billion into the bank's reserves
through the purchase of 300 million new common shares. For its part,
the government will inject $2.2 billion into LTCB on top of the $33
billion of taxpayers' money it already has spent to rid the
investment bank's books of bad loans. The deal took longer to
finalize than first anticipated because of disagreements between the
buyers and the government over the handling of the presumably sound
loans still on LTCB's books and over New LTCB Partners' treatment of
existing borrowers. The consortium, which includes such
financial-industry powerhouses as GE CAPITAL CORP., believes that the
New LTCB, as the bank temporarily will be known, can achieve a net
operating profit of $458.7 million within two years of its launch.

PRUDENTIAL INSURANCE CO. OF AMERICA has taken over the half
interest of MITSUI TRUST & BANKING CO., LTD. in PRUDENTIAL-MITSUI
TRUST INVESTMENTS CO., LTD. In operation since October 1998, the
joint venture was formed to manage and sell investment trust products
(Japanese-style mutual funds). Neither company was specific about why
they had parted ways, saying only that the relationship had served
the purposes of both. For Prudential, that meant getting started in
Japan's relatively undeveloped investment trust market. As of yearend
1999, Prudential-Mitsui Trust Investments ranked 16th among 32
foreign-affiliated investment trust companies with $733.9 million in
assets under management. It had launched eight new products and
developed ties with a number of distributors. For Mitsui Trust, the
joint venture came at a time when its finances were weak. They now
have improved, and the bank is set to merge with CHUO TRUST &
BANKING CO., LTD. Prudential executives say that the company will
continue to expand its investment trust product line, including
beginning several aggressive new funds in the near term, as well as
its distribution system.

AMERICAN INTERNATIONAL GROUP, INC., the top U.S. writer of
insurance policies for companies, will help YASUDA MUTUAL LIFE
INSURANCE CO. prepare for the introduction of defined contribution
pension plans in Japan, now set for the early part of 2001. These
will be similar to America's 401(k) pension plans. Interestingly,
Yasuda Mutual Life expects to get some experience under its belt in
the 401(k)-type pension plan market by first selling pension fund
products designed by an AIG subsidiary to Japanese businesses in Hong
Kong. That part of the relationship will be activated in December of
this year. Later on, AIG and Yasuda Life will extend their alliance
to the Japanese market.

Also with an eye on the arrival of 401(k)-type defined
contribution pension plans in Japan, Manhattan- based ALLIANCE
CAPITAL MANAGEMENT L.P. merged its two domestic units to improve
efficiency. Asset manager ALLIANCE CAPITAL INVESTMENT TRUST
MANAGEMENT, INC. took over investment adviser ALLIANCE CAPITAL
MANAGEMENT (JAPAN), INC. At the end of last December, the new
ALLIANCE CAPITAL ASSET MANAGEMENT, INC. managed $3.4 billion worth of
assets. Its portfolio had been roughly twice as large at its peak in
July 1998, but with most of Alliance Capital's investments in foreign
debt securities, the value of its holdings took a big hit from the
problems of developing markets and the rising yen. Alliance Capital
Asset Management plans to rebuild its asset total by launching
investment trusts that invest in stocks, especially Japanese stocks.

With money continuing to roll into its equity investment trust
products, FIDELITY INVESTMENTS JAPAN LTD. plans to beef up its
research department so that it can track more publicly traded
Japanese companies. The firm's 13 analysts now follow some 500 major
companies, but six more analysts will be added by this spring to
broaden coverage.

The first product for individual investors from JANUS CAPITAL
CORP., one of the top U.S. mutual fund managers, is available in
Japan. NOMURA SECURITIES CO., LTD. is selling the Janus Global
Technology Fund, which invests in Internet, communications, software
and other high technology companies. In a marketing twist, the big
brokerage house is selling the fund in both dollar and yen
denominations.

ASAHI NVEST INVESTMENT ADVISORY CO., LTD. has rolled out the first
investment trust developed in- house since the investment management
units of METROPOLITAN LIFE INSURANCE CO. and ASAHI MUTUAL LIFE
INSURANCE CO. formed the firm last summer (see
Japan-U.S. Business Report
No. 358, July 1999, p. 19). The fund, which has a cap
of $275.2 million, invests in public and corporate bonds from around
the world. An affiliate of MetLife's NVEST COS., L.P. manages the
money. Asahi Mutual Life and 12 brokerage houses are marketing the
fund.

In a sign of the times, AIU INSURANCE CO. is offering a policy
that protects companies against lawsuits involving the contents of
their Web sites. The Home Page Plus policy obligates the nonlife
insurance unit of AMERICAN INTERNATIONAL GROUP, INC. to pay damages
and lawyers' fees if a policyholder loses a libel case.

The world's largest independent asset valuation consulting firm
has decided that the time is right to expand operations in Japan in
light of the increase in mergers and acquisitions, securitization of
assets and other transactions requiring supportable valuations.
AMERICAN APPRAISAL ASSOCIATES, INC. already has an office in Tokyo.
However, it recently decided to partner with SUMITOMO MARINE &
FIRE INSURANCE CO., LTD. and that company's SUMITOMO MARINE RESEARCH
INSTITUTE, INC. consulting unit to broaden its market reach. SMRI
will introduce its clients to American Appraisal's services, which
span valuations of virtually any type of asset for almost any
purpose. To date, valuation consulting in Japan has been monopolized
by domestic brokerage houses and accounting firms.

FOOD AND AGRICULTURAL PRODUCTS

As part of a worldwide restructuring of its procurement,
manufacturing and distribution operations, H.J. HEINZ CO. will close
its plant in Utsunomiya, Tochigi prefecture at the end of August.
Opened in 1982, the factory has five production lines that can turn
out about 130 tons of sauces and soups a day. However, high raw
material prices in Japan and the cost of labor there make the
facility uneconomical. Heinz will transfer the sauces and the soups
made at Utsunomiya to a plant in New Zealand. Some of the 79 local
workers will be offered jobs at Heinz's new technical service center;
the rest will be dismissed. The big Pittsburgh food processor has not
yet decided what to do with the plant site.

In an unusual diversification, GRADCO SYSTEMS, INC., a
manufacturer of sorters, feeders and other peripherals for copiers,
fax machines and printers, acquired from an ITOCHU CORP. affiliate
exclusive rights to distribute for five years frozen dessert products
made by DIPPIN DOTS INC. of Paducah, Kentucky. The new business is
being run by a Tokyo subsidiary recently formed by the Irvine,
California- based company. Local management personnel have a 10
percent stake in the venture, which took over distribution agreements
with 32 dealers. Gradco Systems explained its move by noting that the
switch to digital copying and printing has curtailed the market for
its traditional products. Therefore, the company is trying to find
new ways to apply its distribution skills in Japan.

One hundred and counting. That is the number of Starbucks outlets
open in Japan. All of these stores are located in the metropolitan
Tokyo area or in the Kansai region. The joint venture between
STARBUCKS COFFEE CO. and retailer/restauranteur SAZABY INC. that runs
the Seattle company's Japanese operations opened the first Starbucks
in August 1996. This year, Starbucks plans to expand into the Tokai
region and down to Kyushu.

RAINFOREST CAFE, INC., the developer and operator of combination
restaurant/retail facilities featuring a tropical rain-forest theme,
will locate its first unit in Japan at the Ikspiari complex scheduled
to open in July at the new Tokyo Disney Resort. The Tokyo Disney
Rainforest Cafe will be run under a franchise agreement among the
Hopkins, Minnesota firm, MITSUBISHI CORP. and ORIENTAL LAND CO., LTD.
The 350-seat restaurant, which will offer an American menu, and
retail space will be spread over two levels totaling 17,200 square
feet. The rain-forest environment will be created through the pairing
of animation and special effects.

Hoping to reverse falling ice cream sales at its outlets,
HAAGEN-DAZS CO. will close the poor performers among its 84 stores in
Japan  about 20 percent of the total  and replace them
with better-located shops modeled on the dessert cafe it opened at
the start of 1999 in Tokyo's Shibuya district. Interestingly, the
bulk of Haagen-Dazs' revenues, which were flat in 1999 at $306.4
million because of the lagging outlet sales, comes from grocery
stores.

MERCHANDISING

Deciding to cut its loses sooner rather than later, FOOT LOCKER
INC., the world's top retailer of athletic shoes, is pulling out of
the Japanese market. Its wholly owned subsidiary was formed in June
1997. That fall, the first Foot Locker store was opened in Funabashi,
Chiba prefecture. Four other outlets subsequently were established in
the metropolitan Tokyo and Osaka areas. All but the store in the
Shibuya section of Tokyo already have been closed. That shop was to
be shuttered at the end of February, with the liquidation of Foot
Locker's subsidiary following shortly thereafter.

The first TOYS "R" US, INC. store has opened in close-in Tokyo.
Located in the big Sunshine City shopping center/office complex in
the Ikekuburo area of the city, the store has a floor space of 31,700
square feet. That rivals the size of the shopping center's large
department store. After selecting suburban locations for its first 90
or so stores, Toys "R" Us plans to build more outlets in Tokyo proper
as it expands its Japanese chain to 100 stores.

Preparations for the rollout of Mail Boxes Etc. stores, which
provide a range of business services in addition to mail boxes and
package delivery, finally are underway. A unit of convenience store
operator FAMILYMART CO., LTD., which San Diego, California-based MAIL
BOXES ETC. named as its master licensee in the summer of 1998, has
begun recruiting franchise owners in 14 prefectures. They, in turn,
will sign up individual store operators. Two experimental Mail Boxes
Etc. stores have opened in Tokyo.

METALS AND FABRICATED PRODUCTS

A second transpacific partnership has announced plans to develop
an Internet-based steel marketplace specifically for the domestic
steel industry. This group pairs E-STEEL CORP., which launched a B2B
e- com-merce site for the global steel industry in September 1999,
with MITSUBISHI CORP. and MITSUI & CO., LTD. The trio expects to
form a joint venture in April, with the New York City partner having
a 19.9 percent stake and each of the trading companies owning a 40.05
percent interest. Their Web site should be operational in July.
e-STEEL will contribute to the venture its e-com-merce technology for
buying and selling steel over the Internet. Currently, more than
1,200 companies from 65 countries participate in the e-STEEL
Exchange. Given the pivotal role of trading companies in Japan's
steel market, Mitsubishi and Mitsui hope to capitalize on their
connections to sign up 1,500 initial members of the local exchange,
centering on other traders, wholesalers and their agencies,
processors and end users. Commodity products, including steel sheet,
pipe and H-beams, will be the first types of steel available through
the Web site. Trading volume, the marketplace's backers project,
could reach 5.5 million tons annually within three years. METALSITE,
L.P. also plans to bring the efficiencies and the resulting cost
savings of on-line trading to Japan's steel industry in a tie-up with
traders ITOCHU CORP., MARUBENI CORP. and SUMITOMO CORP. (see
Japan-U.S. Business Report
No. 365, February 2000, p. 20).

The world's top supplier of stainless steel scrap is moving into
the Japanese market and bringing with it its technology for producing
less-expensive blended or meltdown stainless steel scrap to replace
the clippings and turnings from the production of stainless steel
that historically have constituted scrap. ELG METALS, INC. will put
up 40 percent of the capital for JS PROCESSING CO., LTD., which will
open a plant in Osaka in May to supply meltdown scrap to the Hikari
Works of NIPPON STEEL CORP. The Pittsburgh company's partners in the
venture are MITSUBISHI CORP. and MITSUI & CO., LTD. (19 percent
each), NIPPON STEEL TRADING CO., LTD. (12 percent) and FUJIMOTO METAL
CO., LTD. and SANGYO SHINKO CO., LTD. (5 percent each). The latter
two firms will operate the Osaka facility. The meltdown scrap
produced by JS Processing basically will substitute for what Nippon
Steel has been importing from an ELG plant in Houston since last
year. However, the joint venture hopes to expand its business beyond
this volume  approximately 40,000 tons a year  and to
sign up other manufacturers of stainless steel. To do so, JS
Processing will have to find a way to overcome the stubborn shortage
of stainless steel scrap in Japan.

EDGE TECHNOLOGIES, INC. and its manufacturing unit, ETREMA
PRODUCTS, INC., have tied up with MORITEX CORP. on the marketing of
and new uses for the Ames, Iowa company's so-called giant
magnetostriction alloy. ETREMA's TERFENOL-D is a specially formulated
iron-alloy smart material that changes shape in the presence of a
magnetic field. That property makes TERFENOL-D suitable for such
current applications as sonic and vibration sources, active noise and
vibration control systems, and ultrasonic devices. As part of the
deal, Tokyo-based Moritex, a manufacturer of fiber optics and machine
vision systems, invested $1 million-plus in Edge for a roughly 3
percent stake in the privately owned company.

NONELECTRIC MACHINERY

In a deal that remedies a major international weakness of its
THERMO KING CORP. subsidiary, INGERSOLL-RAND CO. acquired a 70
percent interest in ZEXEL COLD SYSTEMS K.K. from a restructuring
ZEXEL CORP. Terms of the deal were not disclosed. Minneapolis-based
Thermo King is the world leader in refrigeration units for trucks and
trailers. It also makes these units for rail cars and ocean- going
containers and makes air-conditioning units for buses, trains and
urban mass transit. This description applies almost exactly to Zexel
Cold Systems' business, although its strength in refrigeration units
for trucks and trailers is in lower GVW vehicles while Thermo King's
is in larger vehicles. The American company will use the Tokyo joint
venture's distribution channels to expand its market reach in Japan,
where the demand for climate-controlled vehicles is rising because of
the growth in shipments of perishable foods. Zexel Cold Systems also
should give Thermo King better access to other Asian markets.

FLOW INTERNATIONAL CORP. has added to its primary business of
manufacturing ultrahigh-pressure water-jet cutting and cleaning
systems what it calls fresher-under-pressure equipment for food
treatment. This system employs ultrahigh or hydrostatic pressure to
address food-safety concerns involving products with an extended
shelf life. It is suitable for both liquid and solid prepackaged
foods (batch-mode processing) and integrated treatment and packaging
of pumpable products (in-line processing). The subsidiary of Kent,
Washington-based Flow International has priced the
fresher-under-pressure system at $1.3 million. It hopes to sell two
or three units a year to Japanese food processors.

SHIN CATERPILLAR MITSUBISHI LTD. is targeting first-year sales of
150 units for its redesigned WS510 small wheel loader. Equipped with
a 1.18-cubic-yard bucket, the new model has a hydraulic transmission
to improve operability and the largest engine in its class. The WS510
lists for $77,100, including an air- conditioned cab. .....Hoping to
turn overseas sales of used construction equipment into more of a
money- maker, SHIN CATERPILLAR MITSUBISHI LTD. contracted with
CATERPILLAR REDISTRIBUTION SERVICES INC. to handle all of its
exports. The Nashville, Tennessee unit of CATERPILLAR INC. could take
as many as 200 hydraulic excavators and other pieces of equipment in
FY 2000, primarily for resale through Caterpillar's distributors
elsewhere in Asia. If this goal is hit, the Japanese joint venture's
used equipment sales should total about $22.9 million, a gain of 50
percent or so from the estimated figure for FY 1999.

A ready market exists in Japan for clean, reliable and efficient
on-site power sources. That at least is one reading of the ability of
CAPSTONE TURBINE CORP. to quickly sign up distributors for its
30-kilowatt Capstone MicroTurbine. In the latest deal (see
Japan-U.S. Business Report
No. 363, December 1999, p. 24), MEIDENSHA CORP. and
SUMITOMO CORP. have teamed up to market the Woodland Hills,
California manufacturer's microturbine products and to package them
into combined heat and power systems. The trader will import the
Capstone MicroTurbine and build a nationwide maintenance network.

Meidensha, a maker of heavy electrical equipment, will develop
stationary applications for the microturbine and provide systems
integration and after-sale service for its customers, which include
some of Japan's biggest electric utilities. So sold are Sumitomo and
Meidensha on Capstone Turbine's technology that they made a joint
equity investment in the privately owned company.

NORTHWEST POWER SYSTEMS is exploring the residential market in
Japan for fuel-cell systems in cooperation with trader TOKYO BOEKI
LTD. and CORONA CORP., a major maker of home heating and cooling
units. Two NPS prototype residential fuel-cell systems will be
field-tested until the end of 2000 in a fully functional,
1,500-square-foot house built by Niigata prefecture-based Corona. The
trial will determine what changes need to be made to the system to
make it locally marketable. The NPS test units will generate
approximately 2.5 kw of electricity. Through their heat exchangers,
each system will produce another 2.5 kw that can be used for water
and space heating. Bend, Oregon-based NPS, a subsidiary of IDACORP
INC., says that its fuel-cell systems are powerful enough to meet the
base load requirements of the typical Japanese home if batteries are
used to cover peak load periods. For Tokyo Boeki, its work with NPS
complements its role as the sole distributor of HONEYWELL
INTERNATIONAL INC.'s microturbine power generators.

PHOTO EQUIPMENT AND COPIERS

The list of Japanese firms licensing from FLASHPOINT TECHNOLOGY,
INC. the standardized Digita software platform for intelligent
digital imaging appliances continues to grow. ASAHI OPTICAL CO.,
LTD., the maker of the Pentax brand of cameras, recently joined
KONICA CORP., MINOLTA CO., LTD. and SEIKO EPSON CORP. It will
incorporate the technology in its next-generation products for
enthusiasts as well as for mobile professionals and other business
users. The beauty of FlashPoint's Digita software platform is that it
allows users not only to capture and view images easily but also to
add text annotations, store and catalog them, and implement new
imaging applications that run directly in the camera. .....Meanwhile,
San Jose, California-based FLASHPOINT TECHNOLOGY, INC. announced that
SEIKO EPSON CORP. is using Digita in a new line of digital photo
printers. The software platform enables the ultra-megapixel EPSON
PT-110 to edit, filter, template and output high-quality images from
any type of digital camera without connecting the printer to a PC.
The PT-110 is available now in Japan at a price of $640.

EASTMAN KODAK CO.'s subsidiary has broadened its line of film
products. It is marketing under the Japan-only Gold MAX brand name
Kodak's maximum versatility color film operating at speeds of 400 and
800. New as well is the Advantix 400 color film for any type of APS
camera.

PRECISION AND MEDICAL EQUIPMENT

A surface profiler developed by KLA-TENCOR CORP. for analyzing the
surface topography of substrates measuring up to 920mm x 920mm will
be manufactured and marketed exclusively by TOHO TECHNICAL CORP. The
San Jose, California company will provide the software for the
system, which can handle all types of state-of-the-art R&D and
production flat-panel displays and their color filters, glass
substrates and other components. The Toho FP-20 profiler also can
accommodate large printed circuit boards. Aichi prefecture-based Toho
Technical hopes to sell more than 20 profilers in the initial year of
marketing in Japan, South Korea and Taiwan as well as in the United
States. It priced the least expensive of the three available models
at $275,200.

TEKELEC of Calabasas, California has delivered its velOSity
diagnostic system to NEC CORP. for testing wideband-CDMA or
third-generation mobile communications equipment for deployment in
Japan. The big communications equipment maker is using the solution
to perform functional and capacity testing of ATM (asynchronous
transfer mode) protocols and interfaces. The Tekelec product is
designed to handle the follow-on generation of wireless networking
known as UMTS (universal mobile telecommunications systems). This
standard will unite the currently different standards of the United
States, Europe and Japan for digital cellular phones.

The subsidiary of AGILENT TECHNOLOGIES, INC. is marketing the
Telegra line of test and analysis systems developed by
HEWLETT-PACKARD CO. for testing fax systems across conventional and
IP- based networks. Two of the products address end-to-end testing of
IP fax systems, VoIP gateways, fax servers, fax machines, fax modem
devices and traditional and IP-based fax networks. The Agilent
Telegra D, priced at $11,900, is a notebook-sized system that can be
carried into the field for mobile applications, while the $24,800
Agilent Telegra M is a rack-mounted system designed for test
laboratories and network and service operational testing. The third
product, the Agilent Telegra VQT, provides a detailed analysis of
voice clarity and delay as part of an end-to-end voice testing
regime. According to Agilent, the Telegra VQT, which lists for
$38,900, is the only such product that offers two different but
complementary ways of measuring voice quality.

The transition from film-based imaging in medical institutions to
digital diagnostics has created a storage constraint at these
facilities. The subsidiary of SILICON GRAPHICS, INC. and regional
carrier NIPPON TELEGRAPH AND TELEPHONE WEST CORP. have developed a
solution for this problem. Under their Medical Web initiative, the
partners will take over from hospitals and the like the job of
storing large- capacity data files. The service will network smaller
SGI servers installed at medical institutions, such as the SGI Origin
200 machine, with powerful SGI Origin 2000-class systems located at a
NTT West support center via high-speed leased lines. Digital images
initially stored on-site will be automatically transferred to the
support center every few months for archiving.

A DNA (deoxyribonucleic acid) sequencing aid commercialized by
COMMONWEALTH BIOTECHNOLOGIES, INC. will be available on a
nonexclusive basis through COSMOBIO CO., LTD. and KN INTERNATIONAL,
LLC, both of Tokyo. The Richmond, Virginia firm's AccuTrac is used to
clearly mark DNA sequencing data to eliminate errors in the
sequencing process that otherwise would require costly and
time-consuming manual verification of the test data. CosmoBio, a
distributor of chemical and biological reagents for life sciences
research, will market AccuTrac to its clients, while KN International
will work directly with genome centers and drug companies doing
genome-related research.

MYRIAD GENETICS, INC. gave FALCO BIOSYSTEMS LTD. exclusive rights
to use its diagnostic techniques to provide genetic testing services
 a major step toward more personalized medicine for patients.
The BRACAnalysis genetic test for breast and ovarian cancer and the
CardiaRisk genetic test for hypertension and cardiovascular disease
will be the first products introduced by the Kyoto laboratory testing
company. For the time being, the results will be analyzed at Myriad's
Salt Lake City, Utah research center, but in FY 2002, Falco
Biosystems expects to take over this work. The fast-expanding
Japanese company (see Japan-U.S.
Business Report No. 365, February 2000, p. 20)
projects that the new business will generate revenues of $458,700 the
first year. Falco Biosystems paid Myriad $3 million upfront for its
renewable six-year license. The biopharmaceutical firm also is
entitled to royalties on sales of its products. The line of Myriad
genetic testing products can be expanded at Falco Biosystems' option.

Three of Japan's major clinical laboratories  including the
largest, SRL, INC., and the number two, BML, INC.  will install
TRIPATH IMAGING, INC.'s AutoPap Primary Screening System. This
computerized system is designed to improve the detection of cervical
cancer at the earliest stage. It employs the Burlington, North
Carolina manufacturer's technology to distinguish between normal Pap
smears and those that have the highest likelihood of abnormality.
NIKON CORP. represents TriPath.

The Ministry of Health and Welfare approved R2 TECHNOLOGY, INC.'s
ImageChecker for use in breast cancer screening. The first
computer-aided detection system for mammography cleared for marketing
in Japan, the system utilizes the Los Altos, California developer's
signal-processing neural network technology to help minimize the
possibility of false negative readings by radiologists. MARUBENI
CORP. will distribute the film-based version of ImageChecker (see
Japan-U.S. Business Report
No. 357, June 1999, p. 9).

VIDAMED, INC.  the developer of the TUNA (transurethral
needle ablation) System for the treatment of benign prostatic
hyperplasia, better known as enlarged prostate condition  has
changed distributors. MC MEDICAL, INC., a MITSUBISHI CORP.
subsidiary, replaced CENTURY MEDICAL INC. as the exclusive
representative of the Fremont, California company. MC Medical
initially will handle the minimally invasive ProVu disposable
catheter and the 7600 VTS generator. In connection with this deal,
Mitsubishi made an equity investment described as modest in VidaMed.

The Hydro Med Sciences drug delivery division of GP STRATEGIES
CORP. made MITSUBISHI CORP. its exclusive Japanese licensing
representative. The Cranbury, New Jersey company's lead drug delivery
technology is the Hydron Implant. This polymer-based device, which is
implanted subcutaneously and is retrievable, can deliver a wide range
of drugs at controlled, constant release rates for a year or even
more. It currently is in Phase III clinical testing in the United
States for the continuous delivery of a synthetic hormone to patients
with prostate cancer. The trading company hopes to make drug delivery
systems a key part of its medical operations.

Marketing of CLOSURE MEDICAL CORP.'s DERMABOND Topical Skin
Adhesive could start as soon as the spring now that MHW has cleared
for sale this replacement for sutures and staples for closing certain
lacerations and incisions. ETHICON, INC., a JOHNSON & JOHNSON
subsidiary and the world leader in suture sales, is in charge of
marketing the product, which is based on the Raleigh, North Carolina
manufacturer's proprietary cyanoacrylate technology.

With the expected April 1 launch of the government's home
health-care program, the subsidiary of medical equipment supplier
MALLINCKRODT, INC. sees considerable opportunity to expand sales of
its portable home oxygen treatment equipment. Respirators, tanks and
related products contributed just $6 million toward the St. Louis
firm's Japanese revenues of $128.4 million in the year through June
1999. If all goes according to plan, however, these products could
generate sales of $91.7 million annually in five years. Mallinckrodt
currently sells nine products for home medical use, but it will add
14 American-made portable home oxygen treatment products to its
lineup. The company also plans over the coming five years to boost
its marketing staff to 500 people from 200 now, with most of the new
employees assigned to home health-care products.

What manufacturer MILESTONE SCIENTIFIC, INC. claims is a virtually
painless system for administering local anesthetic in connection with
dental procedures has been cleared for sale. The Wand is a computer-
controlled injection system with a single-use dispos-able handpiece.
The Livingston, New Jersey firm's exclusive distributor, YOSHIDA
DENTAL MANUFACTURING CO., LTD., already has ordered 1,000 system
kits. One of Japan's largest dental equipment wholesalers and
distributors, Yoshida Dental is responsible for ensuring that
dentists are properly trained in the use of The Wand.

The types of laser vision correction procedures that can be
performed using VISX, INC.'s refractive laser technology have
increased. MHW gave the marketing go-ahead to the Santa Clara,
California firm's VISX STAR S2 Smoothscan excimer laser system for
the treatment of myopia, or nearsightedness, with astigmatism. More
than half of Japan's population is estimated to have this problem. In
May 1998, the ministry approved the use of VISX's excimer laser
system for the treatment of corneal scars and dystrophies of the eye.
The company's subsidiary, established in late 1997, is in charge of
training doctors in laser vision correction as well as marketing and
servicing the equipment.

SEMICONDUCTORS

Having already assigned the IBM JAPAN LTD. facility in Fujisawa,
Kanagawa prefecture a greater role in the development and production
of the company's hard disk drives, especially the Travelstar line of
2.5- inch drives for notebook computers, INTERNATIONAL BUSINESS
MACHINES CORP. is taking the next logical step. It will fund the
construction of a pilot wafer-fabrication plant at IBM Japan's Nasu,
Shiga prefecture complex for the manufacture of ASIC chips for
2.5-inch drives. These parts will feature a line geometry of 0.25
micron. Apparently, not all the project details have been finalized,
such as the timing and the cost, although the investment is likely to
fall within the range of $36.7 million to $45.9 million. The latest
Travelstar drive holds an awesome 25.3 GB of data (see
Japan-U.S. Business Report
No. 360, September 1999, p. 16).

TEXAS INSTRUMENTS INC., which has tied its future in the
semiconductor business to DSPs, especially for cell phones, previewed
a new generation of record-breaking DSP cores. Its TMS320C64x DSP
core for broadband communications infrastructure applications,
including 3G wireless base stations and digital subscriber line
equipment, features a clock speed of up to 1.1 gigahertz and performs
nearly 9,000 million instructions per second. According to TI's
calculations, this tops by 10 times the performance of the
TMS320C62x, the current industry leader, in key applications. TI also
announced the TMS320C55x DSP core, which, it says, extends the
battery life of cell phones four times com-pared with the TMS320C54x
now found in 70 percent of the world's cell phones. It does that by
slashing power consumption to six times less than the already
power-efficient C54x. Both DSP cores are software-compatible with
previous generations of TI parts, thereby reducing development times
for product manufacturers.

Right before this announcement, TEXAS INSTRUMENTS INC. indicated
that as part of its plan to invest more money in its DSP business in
fiscal 2000, DSP production capacity would be increased at its
subsidiary's Miho, Ibaraki prefecture wafer fab. Although other
details are sketchy, the expansion will require an outlay of anywhere
from $367 million to $458.7 million.

In its second recent tie-up with a first-tier Japanese
semiconductor manufacturer, TENSILICA INC.  a provider of
application-specific processor cores and software development tools
for high-volume embedded systems  licensed its Xtensa processor
technology to NEC CORP. That company will use the Santa Clara,
California firm's processor generator to develop embedded processors
for a variety of advanced but otherwise unspecified communications
products. What sold NEC on the Xtensa processor technology was the
flexibility it offered to add instructions and functional units
without an extensive knowledge of the processor's microarchitecture.
FUJITSU, LTD. also has licensed Tensilica's know-how (see
Japan-U.S. Business Report
No. 363, December 1999, p. 27).

A number of big makers of computer printers in Japan have designed
into their products controllers from PEERLESS SYSTEMS CORP. Now, the
El Segundo, California supplier of software-based embedded imaging
and networking systems for digital document products has decided to
make its ASIC chips broadly available there. It enlisted MARUBUN
CORP. to sell a pair of Quickprint graphics coprocessors, the QP1910
and the QP1940, to manufacturers of high-speed monochrome products
and production-class color printers and digital copiers. The
distributor also will provide several value-added services to
customers, including just-in-time delivery and ordering and shipping
management.

In a move that certainly was unusual if not unprecedented,
LIGHTSURF TECHNOLOGIES, INC. established an office in Tokyo the same
month that it was founded. The virtually simultaneous launches are
understandable since the Santa Cruz, California business provides
wireless Internet digital photography technology, infrastructure and
intellectual property and Japan is on the cutting edge of
Internet-enabled cell phone technology. LightSurf's actual business
involves integrated wireless digital photography chipsets and system
software. It also licenses to development partners its ePhoto
wireless digital photography architecture and eCommerce
infrastructure.

With contracts in hand from most of the big names in Japan's
consumer electronics industry (see Japan- U.S. Business Report No.
365, February 2000, p. 23) and digital satellite broadcasting
services scheduled to start in December 2000, TERALOGIC, INC., a
developer of ICs and reference designs for advanced TVs, set-top
boxes and PC-TV convergence products, has decided that the time is
right to initiate a major marketing push. The Mountain View,
California firm's subsidiary and distributor MARUBUN CORP. will focus
on three products: the TL850, a single-chip, all-format
video/graphics processor for digital TV sets; the TL750, a
single-chip graphics processor for the new category of products
called personal video recorders as well as DVD players, digital
set-top boxes and Internet TV sets; and the Janus IC, a single-chip,
all-format digital TV decoder designed for the PC platform. Teralogic
believes that this effort can raise sales to $9.2 million in fiscal
2000 and to double or even triple that total the following year.

At the end of 1998, COMIT SYSTEMS, INC., a provider of turnkey
contract engineering services for electronic product development,
opened a design center in Japan. To reach a broader audience, the
Santa Clara, California company now has teamed up with APOLLO GIKEN
CORP. The Yokohama-based supplier of printed circuit board design and
manufacturing services will market Comit's services in the areas of
ASIC design and verification, FPGA (field-programmable gate array)
design and embedded systems design to its own customers, which
include members of the Matsushita Group and SONY CORP. The alliance
also gives Comit access to Apollo Giken's PCB design and
manufacturing capabilities, thereby enabling it to offer more
services to its American and European customers.

By yearend, industry sources report, AGILENT TECHNOLOGIES, INC., a
major maker of automatic test equipment, among other products, will
begin to assemble testers for system-on-a-chip products at its
factory in the Hachioji section of Tokyo. The company reportedly has
earmarked $4.6 million to install a produc-tion line capable of
turning out 20 units a month, primarily to test system chips for
communications equipment and digital home appliances. Agilent, which
is particularly strong in test systems for mixed- signal chips, will
be going up against Boston's TERADYNE, INC., the world ATE leader for
SOC parts, and number-two and Japan market leader ADVANTEST CORP.

In April 1998, fellow ATE manufacturers LTX CORP. and ANDO
ELECTRIC CO., LTD. forged a wide- ranging alliance that included
codeveloping versions of the Westwood, Massachusetts company's Fusion
SOC test platform for marketing in Japan. Ando Electric has released
the first two products to emerge from this relationship. The AL7275,
which tests at 125 MHz, and the 150-MHz AL7292 draw on the broad,
integrated capabilities of the Fusion system to test high-speed
digital, DSP and other devices with the same degree of expertise as
mixed-signal devices and vice versa. Ando Electric believes that it
can sell 40 units of the two models in 2000 for revenues of $45.9
million.

SOFTWARE AND INFORMATION SERVICES

In a much anticipated move, a Japanese version of EBAY INC.'s
person-to-person trading community has gone live. With more than 800
merchandise categories, visitors have access to a broad range of
goods offered by sellers in Japan and priced in yen. Customers also
can view merchandise listed around the world, with pricing either in
yen or in dollars. eBay charges the equivalent of 20 cents to $2.20
to put something up for sale and a transaction fee of 1.25 percent to
5 percent of the item's price. To kick-start its Japanese auction
site, eBay tied up with NEC CORP., the operator of one of Japan's top
ISPs, BIGLOBE. The electronics giant took a 30 percent stake in EBAY
JAPAN K.K. and agreed to promote the site through both off-line and
on-line marketing. .....Simultaneously, EBAY INC. opened a
merchant-to-person auction Web site for local users. Supershops
allows individuals to bid on a wide range of goods offered by such
vendors as MITSUI REAL ESTATE SALES CO., LTD., a broker of
single-family homes and condominiums, used vehicle auctioneer AUCNET
INC. and others.

Playing to the Japanese penchant for being part of a group,
ECIRCLES, INC. has teamed with the subsidiary of ADOBE SYSTEMS, INC.
to launch a fully localized version of its virtual community and
affinity group portal. Besides on-line gaming, executives of the San
Mateo, California firm expect the sharing of digital images to be a
major draw of eCircles.com. Adobe's ActiveShare software makes it
easy for users to post, share and print images from the Internet.
Forthcoming communications applications include discussion groups,
chat rooms and group calendars. A localized e-mail service also will
be available.

Also with an eye on the Japanese shutterbug audience, Seattle's
PICTUREIQ CORP. (formerly Digital Intelligence, Inc.) will integrate
its photographic posting and editing technology into the virtual
community portal run by JSIDE.COM, INC., a subsidiary of HIKARI
TSUSHIN, INC. Based on imaging and video technologies licensed from
ADOBE SYSTEMS, INC., PictureIQ is a device-independent imaging
architecture that allows Web masters and makers of consumer
electronics products to embed flexible, powerful and easy-to-use
digital photography capabilities into their products. The PictureIQ
technology is expected to be deployed sometime in the second quarter.
It will be the first localized Web implementation of that expertise.
Thus, Jside.com believes, it will draw even more people to its
rapidly growing visitor and cell phone-based communities.

Japanese demanding professional images soon will have a new
option. REALTIMEIMAGE, INC. is making its RenderView suite of
on-line, collaborative tools available through an exclusive
three-year master distribution agreement with MARUBENI CORP. and a
subdistributor pact with DIT. CO., LTD. The San Mateo, California
firm's technology makes it possible to view very large image and
graphic files via the Internet in real time. Marubeni will localized
RenderView, while Dit. will be responsible for managing all
software-related installation and administrative operations. The pair
will pitch RenderView to printing firms, pre-press shops, advertising
agencies and graphics arts professionals.

Local audiophiles no doubt will applaud the forthcoming creation
of an equally owned venture by LISTEN.COM, INC. and TRANS COSMOS INC.
The San Francisco developer of a comprehensive digital music
directory and one of Japan's leading Internet venture-capital
companies will launch LISTEN.COM JAPAN, INC. later this year. It will
offer a simple way to find, discover and legally download music by
more than 50,000 artists via links to 400 Web sites. In connection
with the announcement of this deal, Trans Cosmos' Bellevue,
Washington subsidiary made an undisclosed equity investment in
Listen.com, which previously received funding from all five of the
world's major music labels.

HEWLETT-PACKARD JAPAN LTD. has jumped into the burgeoning market
for on-line education, offering two software packages. The first
creates a virtual classroom where instructors and students can
interact in real time. The second is a nonsynchronous system for
students preferring self-paced on-line courses. HP Japan is targeting
training companies and conference management firms with an annual
revenue goal of $1.8 million. Tuition for the real-time package
starts at about $40 per hour per person, while a nonsynchronous
course for 100 students over a three-month period costs $13,300.

With GPS (global positioning system) navigation aids an option on
more vehicles sold in Japan and built-in mobile cellular
communications systems being touted as the next "must-have"
accessory, @ROAD INC. has teamed with HITACHI SOFTWARE ENGINEERING
CO., LTD. to introduce its patented Web-enabled location technology.
The Fremont, California firm's software integrates GPS, wireless data
networks and Internet access to accurately locate vehicles and
provide them with position-dependent information in real time.
Obvious potential customers that Hitachi Software Engineering will
cultivate include trucking companies and firms with employees in the
field.

Already famed for the quality of personalized attention they
deliver, Japanese services firms now will find it easier to take
advantage of Internet technologies to boost their efficiency. The RTS
Service Suite from RTS SOFTWARE INC. has been available since the
spring of 1998 but only in English. However, the modules recently
were completely localized and put on the market by OMRON ALPHATEC
CO., LTD., one of the Waltham, Massachusetts firm's distributors.
They handle automated service contract processing (RTS Service
Contract), delivery of services (RTS Workforce Management), spare
parts inventory and logistics control (RTS Service Supply Chain) and
repair procedures (RTS Depot Repair). In addition, the RTS Service
Suite has a business intelligence module and remote access tools that
enable users to plan, analyze, implement and manage complex,
distributed services operations.

With digital rights management of the software and other products
distributed via the Internet becoming a growing concern, MICROSOFT
CORP. has teamed with FUJITSU, LTD. and FUJITSU SUPPORT AND SERVICE
INC. to offer on-line software license management solutions. Clients
can use the solution's secure tools to deliver software via the
Internet and also to track its usage and spread. Major software users
will benefit by cutting software licensing costs, while software
developers will guard against piracy. The three partners hope to sign
up 1,000 customers for their services and to generate $91.7 million
in revenues over the next three years.

SMARTAGE.COM CORP., a specialist in B2B e-commerce services for
small companies, and SOFTBANK COMMERCE CORP., a wholly owned SOFTBANK
CORP. unit, formed a joint venture to launch what the San
Francisco-based partner says is the first comprehensive Web site for
small business owners in Japan. SMARTAGE JAPAN CORP., in which
SmartAge.com has a 44.4 percent stake, plans to go live with its Web
site in June, helping small businesses to expand their operations and
make money on-line by enabling them to create cutting-edge Web pages
for marketing, on-line sales and other Internet functions. The
Japanese Web presence will be SmartAge.com's first international
effort. SOFTBANK CAPITAL PARTNERS LP is an investor in the U.S.
company (see Japan-U.S.
Business Report No. 362, November 1999, p. 11). For
Softbank Commerce, the venture with SmartAge.com complements an
agreement with VERTICALNET, INC. to set up a company to provide B2B
e-commerce services for big companies (see
Japan-U.S. Business Report
No. 365, February 2000, p. 24).

OTSUKA SHOKAI CO., LTD. is marketing a members-only Internet
portal featuring e-commerce and CALS (continuous acquisition and
life-cycle support) services for the Japanese construction industry.
Based on software and know-how from AUTODESK, INC. and MICROSOFT
CORP., the portal is intended to help small firms in the field
participate in e-com-merce and CALS work for larger companies. With
training and consulting for members provided by the two American
firms, Otsuka Shokai hopes to sign up 50,000 firms within three
years.

Reasoning that every company uses office supplies, MICROSOFT
CORP.'s local arm and FUJI XEROX CO., LTD. have codeveloped the B2B
virtual Office Supply Marketplace. Utilizing Microsoft's proposed
BizTalk version of the eXtensible Markup Language, Fuji Xerox built
the B2B exchange using Windows NT, SQL Server and other Microsoft
products. The partners hope within a year to have 100 firms buying
and selling supplies via the exchange, generating sales of $185.3
million annually.

Going after the whole B2B market, ORACLE CORP.'s subsidiary is
offering to build on-line exchanges to meet any customer need. This
includes industry-specific B2B virtual marketplaces, such as the
auto- xchange site its parent built for FORD MOTOR CO. and its
suppliers, as well as horizontal exchanges that are open to any
company and even regional-specific exchanges. Oracle also will try to
recruit Japanese companies to participate in worldwide exchanges. It
hopes to have the first B2B exchange on-line by midyear.

In part to defend its claim to operate the world's largest B2B
trading community, COMMERCE ONE, INC. opened a Tokyo subsidiary. The
office's mandate not only is to cement and enhance the Walnut Creek,
California firm's ties with its existing partners and customers in
Japan but also to persuade other companies there and elsewhere in
Asia of the benefits of Commerce One's approach to B2B global e-
commerce. Consisting of many open e-marketplaces, the Commerce One
Global Trading Web enables buyers, suppliers and services providers
regardless of industry or geographic location to reach a worldwide
market at any time.

STERLING COMMERCE, INC. licensed its technology to NTT WORLDWIDE
TELECOMMUNICATIONS CORP., the operator of the Arcstar global
communications network, and KAWASAKI STEEL SYS-TEMS R&D CORP., a
provider of systems and network integration services, as a prelude to
a partnership effort to win a share of the growing market for
e-business services outsourcing and consulting in Japan and other
Asian countries. Drawing on the Columbus, Ohio firm's E-Business
Center  a business process integration suite that allows
companies to connect, collaborate, transact business and streamline
relationships on-line  NTT Worldwide and Kawasaki Steel Systems
will offer a variety of e-business software and service solutions.
Kawasaki Steel Systems has distributed Sterling Commerce's GENTRAN
family of e-business process integration solutions for the last three
years.

With Japanese consumers gradually becoming more confident about
shopping on-line, ELGRANDE.- COM INC. has decided to move into the
market. It has a letter of intent to acquire Tokyo-based MDH
CONSULTANTS INC. for $200,000 in cash and Elgrande.-com common stock.
Once the deal is completed, the outfit will be rechristened
SHOPENGINE (ASIA) CORP. It will take charge of developing a Japanese
version of ShopEngine and entering other Asian markets. ShopEngine,
Elgrande.com's flagship product, provides the tools for vendors to
maintain a product and price data base on-line in real time from
which a virtual store can be built. It also handles the fulfillment
of orders and payment processes.

STYLECLICK.COM, INC. has brought its comprehensive e-commerce and
on-line shopping enhancement know-how to local users through an
alliance with ISP STYLECLICK-JP, INC. The Culver City, California
firm provides more than just a virtual store for brand-name, stylish
fashions and accessories, however. It also helps manufacturers and
retailers promote and distribute their products on-line. In exchange
for assisting Styleclick-JP to build and manage the localized
Styleclick.com site, which was scheduled to launch in March, the U.S.
firm will receive up-front fees of approximately $1.4 million. It
also has rights to a share of the revenues generated by the new Web
site.

Also going after the e-commerce solutions market is MAGIC SOFTWARE
ENTERPRISES INC. Even though the Irvine, California firm's
year-old-or-so subsidiary already has seven sales offices, it lined
up five firms to market, sell and support the Magic eMerchant
package. The five, which also agreed to use the solution as a basis
for all future e-business programs they implement, are: AGREX INC.,
an affiliate of FUJITSU, LTD., NAV ASSIST CORP., SUMISHO 4S CORP. and
TOSHIBA ENGINEERING CORP. In addition, PRICEWATERHOUSECOOPERS
CONSULTANTS CO. was engaged to provide its consulting and integration
know-how. Magic Software hopes that its strong position in the
Japanese market for application development tools and its established
base of 18,000 corporate customers will give it a head start in the
e-commerce solutions race.

To help e-commerce sites provide a better virtual shopping
experience, INFORMIX CORP.'s local unit has released a Japanese
version of Informix i.Sell. The solution integrates the Menlo Park,
California firm's powerful data base and application server
technology with an e-commerce suite, tools, enterprise consulting and
global services. The package allows Web sites to generate
individualized pages and responses to visitors based on their
customer profile and other data.

Convenient billing for on-line transactions clearly is a key to
winning the loyalty of Japanese Web surfers. With that in mind,
CARDSERVICE INTERNATIONAL, INC., which describes itself as the
largest privately owned credit-card processor in the industry, became
the dominant shareholder in e-commerce provider ZEUS CORP. in order
to begin offering on-line account settlement services to local
credit-card issuers and merchants. The Woburn, Massachusetts firm's
$183,500 investment will allow Zeus to target small and midsize
retailers with an e-commerce presence in its initial marketing
campaign. Cardservice International also is using its link with Zeus
to introduce two of its secure but user-friendly payment engines to
on-line merchants in Japan: LinkPoint HTML and the high-end LinkPoint
API, which allows participants to add secure sockets layer encryption
capabilities to their products, services or custom storefronts.

In a similar vein, the joint venture that Reston, Virginia-based
CYBERCASH, INC. formed in the summer of 1997 with SOFTBANK FINANCE
CORP. and other investors has accepted a $2.5 million investment from
SOFTBANK CORP. to boost its on-line credit-card settlement services
for Internet malls and e-commerce sites. Cybercash currently has a 30
percent-plus interest in its self-named affiliate. The Softbank
Group's share now is 49 percent versus 39.4 percent beforehand.

The advanced e-mail messaging solution and services offered by
COMMTOUCH SOFTWARE LTD. have been chosen by TOSHIBA CORP. for its new
Biz-Offi portal. The Santa Clara, California company's outsourced
e-mail services will complement BizOffi's menu of business-oriented
information. Commtouch first began providing Japanese-based
outsourced e-mail services in 1997. Today, it claims nearly 1 million
end users.

CYPOST CORP. has completed its purchase of PLAYA CORP., the
developer of the popular Yabumi instant messaging and e-greeting card
service (see Japan-U.S.
Business Report No. 362, November 1999, p. 27). The
$3 million acquisition will give the Dover, Delaware developer of
secure e- communications tools for use on the Internet and private
networks an immediate market presence of 85,000 instant messaging
users, 700,000 e-greeting card hits a month and 64,000 registered
users of Yabumi's free e-mail service. By yearend, CyPost believes,
the number of instant messaging users could reach 150,000.

Aiming at ISPs and operators of large intranets and extranets,
FOURELLE SYSTEMS, INC. of Santa Clara, California released its
bandwidth-optimization solution through KANEMATSU ELECTRONICS LTD.
Venturi 1.5 improves bandwidth usage and availability by compressing
text-based transactions up to 85 percent and graphics transmissions
as much as 60 percent. In addition, Venturi's Intelligent Flow
Control adjusts the randomness of packet flow on the Internet to
reduce packet loss and redundant packet transmissions.

With e-commerce booming and the need for security growing in
tandem, Tokyo-headquartered CADIX INC. cloned its San Jose,
California subsidiary, CYBER SIGN, INC. (see
Japan-U.S. Business Report
No. 364, January 2000, p. 9), in Japan. CADIX owns 55
percent of the new firm. Its partners, each of which holds more than
10 percent of the venture, are: FUJITSU, LTD., MA-TSUSHITA
COMMUNICATION INDUSTRIAL CO., LTD., the venture capital arm of NIKKO
SECURITIES CO., LTD. and SOFTBANK CORP. Cyber SIGN's electronic
signature technology uses the biometric data on the dynamics of a
person's signature  speed, style, pressure and timing  to
verify their identity during the act of signing. Its software is
smart enough to track the natural changes of a signature over time as
well as to allow for slight variations in a handwritten signature.
The system is paperless and conducted in real time via the Web,
allowing users to authorize and sign electronic documents and
transactions from any Internet access point.

NETWORK ICE CORP. has released a localized version of its BlackICE
Defender firewall through distributor TOYO CORP. (see
Japan-U.S. Business Report
No. 358, July 1999, p. 29). With its "no configuration"
installation, BlackICE Defender is targeted at Windows 95/98/NT users
with "always-on" DSL or cable-mo-dem connections to the Internet. The
San Mateo, California firm's system tracks traffic, detects
intrusions and blocks them without slowing other transmissions by
using a minimum of system resources and memory.

Meanwhile, Portland, Oregon-based WEBTRENDS CORP. released its
Firewall Suite 3.0 through SOFTBOAT INC. The package monitors the
performance of a wide range of firewalls, gathering data on incoming
and outgoing traffic, employee Web usage, bandwidth utilization by
user or destination, protocol distribution and several other metrics
that can help administrators analyze their security precautions and
maximize the use of Internet resources.

By integrating packages from three U.S. firms, Tokyo-based ASGENT,
INC. hopes to offer a similar multilayered approach to network
defense for Unix-based systems. WEBTRENDS CORP.'s Firewall Suite 3.0
provides the front line of defense by monitoring and assessing
firewall activity. Next, COMPUTER ASSOCIATES INTERNATIONAL, INC.'s
AutoSecure Access Control for Unix authenticates users when they
initially request access to a server. The final layer of protection
is FRESHWATER SOFTWARE, INC.'s SiteScope, which monitors server and
transaction activity behind the firewall. Asgent offers several
combinations of hardware and consulting services for prices ranging
from $4,800 to $8,200. It has set a sales goal of 500 integrated
packages a year.

NETWORK ASSOCIATES, INC. named SUMITOMO CORP. as a primary
distributor of its security software products. The trader joins
ASSIST CO., LTD. and SOFTBANK CORP. in that position. Sumitomo has
formed a 15-person team, including engineers, to build a security
systems integration business around NAI's products. The group, which
is expected to double in size by yearend, has the capabilities to
assess a client's security measures, analyze their performance and
design enhancements and improvements. Sumitomo hopes these activities
will ring up $22.9 million worth of NAI software sales in 2000. After
three years, it projects, software sales and integration services
will generate revenues of $91.7 million annually. In conjunction with
the new distribution arrangements, Sumitomo and Softbank each
acquired a 1 percent stake in NAI's subsidiary, while Assist invested
the equivalent of a 0.25 percent interest.

Signaling an increased commitment to the Japanese market,
TRIPWIRE, INC. opened a Tokyo office to sell its intrusion detection
and monitoring tools (see
Japan-U.S. Business Report
No. 362, November 1999, pp. 28-29) directly to
customers. The Portland, Oregon firm's office will be staffed by 10
employees by the end of this year. They will work with Tripwire's
existing roster of distributors, including a KYOCERA CORP. affiliate,
MATSUSHITA INTER-TECHNO CO., LTD. and TOSHIBA INFORMATION SYSTEMS
CORP. Tripwire, which launched English-language versions of its
products in Japan in April 1999, expects its direct-sales efforts to
produce revenues of $4.6 million in the first year. That projection
presumably reflects the near-term introduction of a localized version
of a server-installed program that detects tampering of Web sites.

Several Japanese PC retailers planned to begin selling the
localized version of MICROSOFT CORP.'s latest operating system,
Windows 2000, at midnight of its international debut day in
anticipation of strong consumer demand. Even though experts say that
business users will benefit the most from the all-new operating
system given its links to Windows NT 4.0, retailers think that
individuals will be interested because the package incorporates
functions from Windows 98. An upgrade from that operating system has
a street price of $155.

APPLE COMPUTER, INC. continues to lay the foundation for the debut
of its new-from-the-ground-up Mac OS X operating system. With the
Japanese market accounting for a significant share of global Apple
sales and local Mac users some of the company's most loyal customers,
Apple's subsidiary announced that the new OS will include the highest
quality Japanese fonts and an expanded font set when it begins
shipping. The fonts  17,000 characters in each of six typefaces
 will be licensed from DAINIPPON SCREEN MANUFACTURING CO., LTD.
They are based on the Japanese firm's highly regarded Hiragino
professional publishing font. Mac OS X will be preloaded as the
standard operating system on all Macintosh computers beginning in
2001.

Aiming to push the open-source Linux operating system out of its
current niche applications, the subsidiary of TURBOLINUX, INC.
introduced a localized version of its San Francisco parent's
clustering extensions for Linux. TurboCluster Server 4.0J is the
first Linux implementation that allows users to link together
multiple processors as a single node, improving the OS's suitability
for mission-critical systems and such high-volume applications as
e-commerce. License prices range from $1,200 for a two-server node to
$2,300 for an unlimited number of servers. Those charges are less
than a tenth of the price of comparable Unix clustering software,
TurboLinux officials say.

Crosstown compatriot LINUXCARE, INC. established a subsidiary in
Tokyo to meet the rising demand for Linux consulting and support.
Besides providing localized versions of Linuxcare's four strategic
business lines  professional services (consulting, integration,
migration and customization), 24x7 technical support, Linuxcare
University and Linuxcare Labs (vendor-neu-tral certification and
benchmarking)  to Japanese customers, the new unit will be in
charge of coordinating Linuxcare's entire Asian Pacific operations.

COMPAQ COMPUTER CORP.'s marketing arm introduced a compiler for
the company's Alpha family of 64-bit RISC processors optimized for
the Linux OS. The compiler currently is available for two languages:
Compaq Fortran for Linux Alpha v.1 ($625) and Compaq C for Linux
Alpha v.6.2 ($75). Its release should help firms migrate from legacy
systems to the new Linux/Alpha environment. The sales subsidiary of
Farmington Hills, Michigan-based COMPUWARE CORP. is trying to latch
on to the popularity of ORACLE CORP. software for e-commerce
applications by releasing a version of its debugger for PL/SQL source
code. XPEDITER/SQL 3.1J offers improved handling of software "stalls"
when waiting for locked objects, better step-through debugging
features and greater support for global variables.

UNISYS CORP.'s subsidiary is marketing its own unique component
model-based integrated development environment for Unix and Windows
NT systems. Lucina (pronounced Loo-kee-na) cuts project times by
encouraging the reuse of components as well as by allowing parallel
creation and optimization of software modules. The Unisys unit, which
will provide consulting and support for the new IDE, hopes to get 60
companies to try it over the next three years. A basic license for
Lucina starts at $13,800.

UNISCAPE, INC. of Redwood Shores, California has licensed its
Web-based multilingual software localization management platform to
COMPUTER INSTITUTE OF JAPAN, LTD. CIJ will deploy this solution with
its internal localization staff and will use it to manage via the Web
Japanization projects handled by its Santa Clara, California
subsidiary. The contract represents Uniscape's first foray into the
Asian market, but executives see a growing demand in the region for
the company's on-line multilingual management technologies because of
the explosion of Internet and e-com-merce activity.

Also acutely aware of the Internet boom, IBM JAPAN LTD. has begun
offering 24-hour technical support to e-commerce clients as well as
to those in the emerging application service provider field. The
round- the-clock service comes at the bargain price of $735 a month
for existing IBM Japan customers.

One of the world leaders in information technology, San Diego,
California's SCIENCE APPLICATIONS INTERNATIONAL CORP., has agreed to
team with MARUBENI CORP. to offer IT consulting services throughout
the Asian Pacific region. Their comprehensive menu will include
e-commerce applications, Web security and computer system development
and integration. The partners could establish a joint venture in
Japan as early as April to implement their collaboration. Given
SAIC's international standing and the explosion of interest
throughout Asia in IT, Marubeni believes that this business could be
producing annual revenues of $917.4 million within five years.

With the Internet and e-commerce exponentially expanding the
boundaries of a company's computing environment, the need to keep
track of every user, hardware resource and data store becomes both
more important and more difficult. NOVELL, INC. and marketing partner
NETSERVE INC. have teamed up to help customers handle this task. They
are using the latest versions of the Provo, Utah company's Novell
Directory Service. NDS eDirectory is tuned for e-commerce
applications, while NDS eDirectory Corporate Edition can handle the
needs of big multinationals. In both cases, the software makes
administering and monitoring large, dynamic, heterogeneous computing
environments a manageable task. The packages also allow applications
and processes to share data and resources.

Piggybacking on the release of the Windows 2000 operating system,
VERITAS SOFTWARE CORP.'s affiliate is offering an updated version of
its popular network backup utility, VERITAS Backup Exec. Version 8.0
reads and writes directly to the MICROSOFT CORP. backup utility. It
can share devices among Windows and Novell NetWare networks and back
up and recovers Microsoft Exchange installations. A basic license has
an introductory price of $990, while an advanced license starts at
$1,500-plus.

A new utility that allows NetWare users to print documents on
remote printers via the Internet is available from NOVELL, INC.'s
subsidiary. NetWare Enterprise Print Services simplifies network
printer management and is platform and protocol agnostic. The
solu-tion does depend, however, on printer manufacturers building a
new standard gateway to the Internet into their machines. To date,
HEWLETT- PACKARD CO., LEXMARK INTERNATIONAL, INC., TEKTRONIX, INC.
and XEROX CORP. plus SEIKO EPSON CORP. have done that.

NCR JAPAN, LTD. is lending its expertise in data-mining to a new
business intelligence consulting project initiated by NTT
COMMUNICATIONWARE CORP. The partners were to complete installation of
a data- mining center at a NTT Communicationware facility this month
and to launch client recruitment efforts. Besides providing accurate
market trend analyses and forecasts, the two companies will use their
data- mining resources to improve clients' customer relationship
management systems. NCR Japan and NTT Communicationware expect the
new business to produce revenues of around $91.7 million over the
next five years.

Also in this market segment is the duo of CORVU CORP. and SHARP
SYSTEM PRODUCTS, INC. The Japanese systems integrator has agreed to
distribute the Minneapolis firm's business intelligence and
performance management solutions as primary elements of its data
warehouse product line. CorVu's CorBusiness helps users merge
business visions, undertake competitive analysis and tailor metrics
to enable effective execution of business strategies. Its CorManager
is the only foreign "balanced scorecard" solution offered in
Japanese. SSP officials expect it to raise the bar for competing
products.

INFORMATICA CORP. has released an upgrade to its data integration
packages that gives them multilingual capabilities. The Unicode
extensions for PowerCenter, PowerMart, PowerConnect for SAP R/3 and
PowerConnect for PeopleSoft were developed in cooperation with
MITSUBISHI ELECTRIC CORP., the Palo Alto, California firm's primary
distributor (see Japan-U.S.
Business Report No. 357, June 1999, p. 26). MELCO
already has sold licenses to the Informatica software to several
companies described as among Japan's largest. MELCO also has paired
Informatica's products with its own DIAPRISM data warehouse
enhancement software and is reselling the bundle as a high-power,
turnkey data integration solution.

INFORMATION BUILDERS has built a simple data integration and
Web-enabled reporting and querying front-end for FUKUOKA BANK, LTD.
Sold via and installed by the New York City firm's agent, ASHISUTO
K.K., Information Builders' EDA, FOCUS and WebFOCUS products tie
together the bank's various legacy mainframe systems and allow
employees to access through the companywide intranet the records of
any of the 3 million Fukuoka Bank customers in a few seconds from any
of the bank's 142 branches. At the same time, customers can get
account information on-line. Fukuoka Bank invested $10 million in
hardware and software to implement the new solution.

Moving into the Japanese market, San Jose, California-based INPUT
SOFTWARE, INC. signed a reseller agreement with WANBASHI ARCHIVES
CO., LTD. for its InputAccel information-capture software. The
localized version of InputAccel was developed with the Tokyo
company's assistance. The software allows large volumes of
information to be digitized and placed on-line. Input Software and
Wanbashi Archives also have their first contract. It involves
building an InputAccel system capable of digitizing more than 10
million credit-card applications submitted to JCB CO., LTD., Japan's
largest credit-card issuer.

The subsidiary of Pleasanton, California-based PEOPLESOFT, INC.
has engaged its PRICEWATER- HOUSECOOPERS CONSULTANTS CO. counterpart
to help it localize and fine-tune the new version of its enterprise
resource planning package, PeopleSoft 8.0. The pair has formed a
40-person localization and development unit that will recast the ERP
software's user interface and feature set based on PWC's advice.
After completing the makeover of the finance and human resources
modules, the partners will work on the marketing/distribution
management and manufacturing management sections.

ORACLE CORP. licensed its Oracle Applications ERP solution to
HITACHI, LTD. for use in a new application service provider unit
aimed at small businesses. Hitachi plans a three-stage rollout for
its ERP service starting April 1. It first will offer e-commerce
and Internet-based customer service management. It then plans to add
on-line order and sales management services before completing its ERP
menu with on- line procurement and purchasing services. The company
plans to charge a base fee of $1,800 per month and $530 per user;
such options as 24x7 technical support and custom development will be
extra.

In a separate announcement, ORACLE CORP. revealed that FUJI SOFT
ABC INC. will deploy the Oracle Applications ERP package to improve
productivity and speed up operations throughout its administrative
and manufacturing facilities. With Oracle's help, Fuji Soft ABC will
custom-tailor Applications to its needs, beginning with accounting
functions. The Japanese customer hopes to use Oracle's software to
eventually integrate all aspects of its operations.

NIHON UNISYS, LTD. is marketing Expert CAM 2000, a computer-aided
manufacturing suite developed in-house. Running on Windows NT
systems, the program accepts data from a wide range of computer-
aided design and engineering programs and formats, including IGES,
JAMA-IS, Catia, I-DEAS and Unigraphics. Pricing of the package starts
at $27,500; it also can be leased for $920 and up a month. Nihon
Unisys hopes to sell 500 copies of Expert CAM 2000 the first year.

ENGINEERING GEOMETRY SYSTEMS has brought its 3D milling module to
local users of its FeatureCAM v6 package. SolidM for FeatureCAM
accelerates the creation of programs for computer numerically
controlled machine tools by intelligently recognizing features in
imported 3D CAD models. The add-on is available through the Salt Lake
City, Utah firm's distributor, FCS INTERNATIONAL, INC., which aims to
sell 120 units of the $5,500 program.

Mirroring the recent alliance between their parents, IBM JAPAN
LTD. and the subsidiary of San Mateo, California-based SIEBEL
SYSTEMS, INC. have teamed up to prepare five turnkey e-business
packages. The first of the Start Now Series is a customer
relationship management module, which the companies will jointly
market and support. Future Start Now packages will be aimed at sales
force automation, call center operations and data warehouse/mining.

Separately, SIEBEL SYSTEMS, INC.'s subsidiary is offering its CRM
solution to midsize firms through agreements with local application
service providers. The Tokyo unit arranges the software licensing
through the customer's existing ISP or ASP. Its initial focus is
Siebel for Workgroups, which is designed for midsize companies.

Taking the same tack, the sales unit of FIREPOND, INC. is leasing
its Waltham, Massachusetts parent's Signature Plus sales force
automation package and FirePond Application Suite via the expanding
ASP community. A big selling point of this delivery method is the
savings achieved by leasing the software from an ASP. For Signature
Plus, the starting fee of $91,700 is less than one-tenth the cost of
purchasing the package outright. INFORMATION SERVICES
INTERNATIONAL-DENTSU, LTD. will provide the ASP infrastructure for
FirePond. It also will help with marketing. The partners hope to sign
at least 10 leases in FY 2000.

KANA COMMUNICATIONS, INC. has made a big splash in the Japanese
CRM market. In just one month, the leading provider of on-line
customer communications solutions landed its first customer 
G-SEARCH LTD., a FUJITSU, LTD. subsidiary  opened an office in
Tokyo and signed NIHON UNISYS, LTD. as a value-added reseller. In
July, G-Search will implement the Redwood City, California-based
firm's Kana Response platform to manage Web-based inquiries from the
3.6 million users of @nifty, Japan's top ISP. For its part, Nihon
Unisys will offer the complete Kana 5 suite, which includes modules
for on-line marketing, sales and service.

The marketing arm of ADOBE SYSTEMS, INC. has previewed a localized
version of the San Jose, California firm's next-generation page
layout program. Scheduled to ship in the fall, Adobe InDesign will
offer the most extensive support ever for Japanese text and
typography. It will form the basis for Adobe's professional
publishing solutions in this key market. The nonproprietary Japanese
composition engine will deliver full-featured and flexible
typesetting of Japanese text, a first for the local desktop
publishing market. In addition, InDesign handles many media types
besides text, making it suitable for use in a wide range of fields.

The slugfest in the market for voice-recognition software is
entering a new round. IBM JAPAN LTD. is on the verge of introducing a
Japanese version of ViaVoice Millennium for Macintosh computers. The
new iteration learns to recognize a user's voice much more quickly
than earlier versions. It also adapts more facilely to individual
speech patterns and preferences. ..... DRAGON SYSTEMS, INC. already
has launched a counterattack by releasing a localized version of its
Dragon Speech Select v3.6J. The Newton, Massachusetts firm bills
itself as the "natural speech" company, and its software focuses on
this aspect of speech recognition. Dragon System's subsidiary is
marketing the package on an OEM basis to computer makers.

The Disney Interactive unit of WALT DISNEY CO. will work with
Japan's leading third-party home videogame developer, SQUARE CO.,
LTD., to develop gameware for SONY CORP.'s forthcoming PlayStation 2
console. The development team will be led by Square's Tetsuya Nomura,
the man responsible for the firm's wildly successful Final Fantasy
series. Disney and Square hope to debut their first interactive title
in Japan by yearend 2001 and in North America and Europe in 2002.

In April, SOLIDWORKS CORP.'s subsidiary will roll out a version of
the midrange SolidWorks 2000 3D CAD package. It will be priced at
$9,000. In preparation, the Concord, Massachusetts developer lined up
another distributor. MUTOH INDUSTRIES LTD. agreed to make SolidWorks
2000 the centerpiece of its marketing efforts, even though it handles
AUTODESK, INC.'s AutoCAD 2000 and Mechanical Desktop as well as NIHON
UNISYS , LTD.'s high-end CADCEUS CAD/CAM system. SolidWorks 2000,
which runs on Windows machines, is easy for engineers and designers
to learn yet offers enough power to handle most needs. Through its
various distribution arrangements, SolidWorks expects to sell 3,500
copies of SolidWorks 2000 within this year.

Coincidentally, NIHON UNISYS, LTD. released the latest iteration
of the Japan-only CADCEUS. The new version is a much more
comprehensive program, extending its reach to the entire process of
designing and making products with integrated CAM and product data
management modules. Nihon Unisys is targeting as initial sales leads
the 600-plus current CADCEUS users. They include TOYOTA MOTOR CORP.,
which has made the program the core of its overall, integrated
CAD/CAM system.

With wireless Internet access all the rage in Japan, SPYGLASS INC.
has lined up a second distributor for its Prism Web content
transformation and delivery platform. MITSUI & CO., LTD. joins
FUJITSU, LTD. (see Japan-U.S. Business
Report No. 364, January 2000, p. 30) as a reseller
of the Naperville, Illinois firm's flagship product. Prism converts,
optimizes and transmits Web content originally created for PCs to
small- screen devices like cell phones and personal digital
assistants. Mitsui will offer Prism to ISPs, content providers and
communications carriers through its ASP operation. The package costs
$91,700 per server processor. The trader projects Prism sales at $4.6
million a year.

TELECOMMUNICATIONS

The data-dedicated optical network that CROSSWAVE COMMUNICATIONS
INC. is extending nationwide has given another lift to CIENA CORP.'s
Japanese revenues (see
Japan-U.S. Business Report
No. 354, March 1999, p. 30). The Lithicum, Maryland
manufacturer of DWDM equipment is shipping its advanced MultiWave
CoreStream optical transport system to the joint venture among
INTERNET INITIATIVE JAPAN INC., SONY CORP. and TOYOTA MOTOR CORP.
through exclusive distributor NISSHO ELECTRONICS CORP. The CoreStream
system, which consists of optical terminals, amplifiers and add/drop
multiplexers, can scale to 2 terabits per second of capacity over a
single fiber. It modular DWDM architecture enables carriers like
Crosswave to expand capacity incrementally through any combination of
OC-12 (622 Mbps), OC-48 (2.5 Gbps) or OC-192 (10 Gbps) optical
interfaces. The latest Crosswave order reportedly is worth some $45.9
million. The build-out of the company's optical network is expected
shortly.

ARRAY TELECOM CORP., a Herndon, Virginia supplier of carrier-class
and enterprise IP telephony gateway products, has a $2 million-plus
contract for its Array Series 3000 VoIP gateway system from TVS,
INC., a provider of VoIP service through its nationwide IP-based
network. The order covers 100 systems, which the data communications
firm expects to deploy by yearend. TVS said that the excellent voice
quality and the flexibility of the Array Series 3000 sold it on the
equipment. Array Telecom is a COMDIAL CORP. subsidiary.

Competitor NETSPEAK CORP. has a contract to supply equipment to
TELEMATRIX CORP., described as Japan's largest independent Internet
telephony carrier. Included in the order are the Boca Raton, Florida
firm's iTEL platform-based Gatekeeper and Route Server, which
TeleMatrix will employ to better manage its network and to support
such additional value-added applications as voice-enabled e-
commerce. The scalable Gatekeeper handles more than 100 calls per
second. The Route Server manages network resources and determines
route priorities. TeleMatrix, which launched its IP telephony network
in June 1997, operates more than 40 points of presence within Japan.
Its primary customers are small and midsize businesses and consumers.

The major xDSL field trial conducted in Ina, Nagano prefecture for
more than two years in the late 1990s has resulted in an order for
participant PARADYNE NETWORKS INC. The Tampa, Florida manufacturer's
Hotwire MVL (multiple virtual lines) system was selected by
INFOVALLEY CO., LTD., an ISP owned by FUJITSU NAGANO ENGINEERING CO.,
LTD., for use in its new DSL high-speed Internet access business. DSL
technology transforms existing copper telephone lines into high-speed
digital networks. Paradyne's Hotwire MVL system, for instance, can
transmit information at speeds of up to 768 kilobits per second. That
makes it well-suited for such services as Internet access in homes
and small offices.

In their second deal, C-COR.NET has won a contract to supply its
FlexNet 900 Series radio-frequency trunks and bridges along with
Navicor line extenders to TITUS COMMUNICATIONS CORP. Japan's
number-two cable television operator will use this equipment, which
works in the 862-MHz bandwidth and is adapted to the 55/70 frequency
split required for Japan, to support the delivery of telephony and
video services as well as Internet access over its cable networks.
The State College, Pennsylvania manufacturer's hardware will be
installed during 2000 in three Titus projects, two of which are in
the Tokyo suburbs with the other located in Sapporo. Kobe's DX
ANTENNA CO., LTD. is C-COR.net's distributor.

Server appliance designer COBALT NETWORKS, INC. has delivered to
NTT MOBILE COMMUNICATIONS NETWORK, INC. Multimedia Mobile Qube
devices for the company's small and midsize business subscribers. The
MM Qube, based on the Mountain View, California company's open-
standards platform (see Japan-U.S.
Business Report No. 364, January 2000, p. 31), will
provide core Web services and wireless Internet access to these
customers. They also will be able to access their e-mail remotely via
cell phones and a variety of notebook PCs and PDA devices.

In an arrangement that should give a major boost to AT&T
CORP.'s network outsourcing and secure managed Internet access
businesses for multinationals, NTT COMMUNICATIONS CORP. agreed to
acquire a 15 percent interest in AT&T Global Network
Services-Japan for $50 million. The long-distance and international
communications unit of NIPPON TELEGRAPH AND TELEPHONE CORP., which
will have two seats on AGNS-Japan's board of directors, has the right
to increase this stake. More important than the equity relationship,
though, the tie-up should help AGNS-Japan sell its networking
professional services to NTT Communications' major corporate
customers. In fact, the Japanese carrier will allow AGNS- Japan to
use the NTT Com logo with its own logo. Equally critical, the
AT&T affiliate will be able to tap NTT Communications' expertise
in developing or enhancing solutions services for multinationals that
want to free themselves of the responsibility for managing their
increasingly complex corporate networks. The deal between AGNS-Japan
and NTT Communications followed a spring 1999 memorandum of
understanding under which AT&T and NTT agreed to collaborate on
corporate network solutions (see
Japan-U.S. Business Report
No. 356, May 1999, p. 30).

In April, WINK COMMUNICATIONS, INC., the promoter of a system for
delivering low-cost e-com-merce via TV sets, will acquire an
undisclosed minority stake in MEDIASERVE CORP. The Tokyo company was
formed in 1996 by MITSUI & CO., LTD. and TOSHIBA CORP. to process
responses and create content for the Wink-based analog terrestrial
interactive TV services that began in October of that year. The
pending investment by the Alameda, California company reflects
MediaServe's near-term expansion into digital response processing and
digital data broadcasting via a digital high-definition TV
broadcasting satellite to be launched later this year. Toshiba also
will put more money into the company to fund the transition. A number
of other big-name Japanese corporations are investors as well in
MediaServe.

Investment bankers GOLDMAN, SACHS & CO. and MORGAN STANLEY
DEAN WITTER & CO. will invest in start-up EACCESS LTD., which
plans to offer high-speed, low-cost Internet access to small
companies and consumers as soon as this fall using DSL technology. In
the near term, eAccess expects to issue $4.1 million worth of new
shares. The two Wall Street firms will buy a significant portion of
the total, with Japanese venture-capital companies acquiring the
rest. eAccess still has not decided all the operational details of
its business, such as whether to build its own network or to use
existing infrastructure.

Industry sources report that INTEL CORP. was one of the companies
to acquire a stake in CYBIRD CO., LTD. through a third-party share
allocation. The Tokyo-based start-up develops content for cell phones
and PHS (personal handyphone system) handsets that can access the
Internet. It currently has contracts with NTT MOBILE COMMUNICATIONS
NETWORK, INC. and other major Japanese mobile communications services
providers. Cybird will use the money raised, including the $917,400
thought to have been invested by Intel, to produce content for the
third generation of cell phones that is set to debut in Japan in the
spring of 2001. These devices will be capable of broadband Internet
connections.

For some time, INTEL CORP. has seen cellular and other wireless
communications products as a major growth market for its flash
memories, chipsets, software and other technologies. The work it has
been doing with Japanese manufacturers of these products now has been
formalized in the second Intel Wireless Competence Center. Located in
Tsukuba, Ibaraki prefecture, the center's job is to promote the
development of wireless Internet access technologies, whether content
or services, through tie-ups with local companies. Intel already has
named its first four partners: CYBIRD CO., LTD., software developer
JUSTSYSTEM CORP., ACCESS CO., LTD., also a software developer, and
San Diego, California's PACKETVIDEO CORP., a supplier of a
software-based broadband testing solution for 3G wireless networks
(see Japan-U.S. Business Report
No. 365, January 2000, p. 30). The first Intel Wireless
Competence Center was established late last year in Stockholm,
Sweden.

STARNET, which bills itself as the largest V.90 wholesale ISP in
North America with more than 800 points of presence, has extended its
MegaPOP network to Tokyo. The first such company to reach Japan,
Palatine, Illinois-based StarNet plans to extend its services to
Osaka and Nagoya in the coming months. That will give its ISP
customers even greater marketing opportunities.

@NETWORK INC., a San Jose, California company set up last year by
Japanese, American and Taiwanese investors, is offering to be the
virtual subsidiary in Asia of U.S.-based e-commerce vendors. It has
announced plans to develop a data and voice network, consisting of
data centers in major Asian metropolitan areas, that is linked to the
United States through a transpacific IP backbone. A hub in Japan will
be at the center of this infrastructure, which will enable @Network
to host, colocate and manage e- commerce Web content from American
suppliers in one unified Asian network. It also will offer a variety
of value-added services, such as Web content localization, consulting
and marketing. At present, @Network is developing data centers in
Tokyo and Osaka; five others are planned for Japan.

The stampede by American and domestic companies to build massive
data centers in Japan to offer secure Web-hosting or colocation
services to companies that have decided to completely or partially
outsource management of the infrastructure that supports their
Internet operations is behind the pending formation of a company to
sell servers, networking equipment and software to these facilities.
Spearheading the venture is the powerful trio of SUN MICROSYSTEMS,
INC., CISCO SYSTEMS, INC. and ORACLE CORP. Other companies, including
NTT DATA CORP. and TOKYO ELECTRIC POWER CO., INC., are expected to
participate in the Internet Data Center Initiative venture. It will
provide consulting services and technical support to data center
operators in addition to marketing hardware and software.

Also targeting this market is EXTREME NETWORKS, INC. (see
Japan-U.S. Business Report
No. 356, May 1999, p. 32). The Santa Clara, California
manufacturer's subsidiary has introduced two new BlackDiamond Layer 3
chassis systems aimed specifically at the demanding requirements of
data centers. The BlackDiamond 6816 is claimed to be the industry's
first product to scale routing and switching performance to more than
192 million packets per second. It also is said to deliver a
market-leading port density of up to 192 Gigabit Ethernet ports or
1,536 10/100BASE-TX ports in a single chassis. The capabilities of
the BlackDiamond 6808 are only slightly less impressive. It can move
more than 96 million pps and can accommodate up to 96 Gigabit
Ethernet ports or 384 10/100BASE-TX ports, with all switching and
routing at wire speed. These switches also are the first to support
10-Gbps Ethernet connectivity.

In a worldwide release, INTEL CORP. unveiled a family of
communications products and services designed to improve e-commerce
transactions through faster on-line connections, security
authentication and server response time. They will be marketed under
the Intel NetStructure brand name. Among the products that Intel's
subsidiary is introducing is the Intel NetStructure 7180 e-Commerce
Director. Priced at $68,800, it is described as the first device of
its kind to combine security acceleration and application- aware
traffic management to up the speed of user authentication
transactions by as much as 150 times. For its part, the Intel
NetStructure 7110 e-Commerce Accelerator, which lists for $22,900,
boosts the speed of e-commerce traffic by offloading the processing
power needed by the server for secure Internet transactions.

PACKETEER, INC.  the Campbell, California supplier of the
three-model PacketShaper line of products that helps ISPs and other
operators of wide area networks to use bandwidth more efficiently by
allocating it according to the needs of the applications running and
the provider's objectives  has tied up with CHORI JOHO SYSTEM
CO., LTD. The Osaka developer of network software will integrate
Packeteer's products into its network systems to strengthen its
Internet application infrastructure capabilities. That done, Chori
Joho will move into the business of supplying network solutions to
the new breed of application service providers.

In the latest wrinkle of its strategy for ensuring that it is the
dominant supplier of networking equipment in Japan as well as in the
world, CISCO SYSTEMS, INC.'s subsidiary tied up with well-connected
JAPAN RESEARCH INSTITUTE, LTD. The new collaborators will design and
develop solutions for companies interested in moving their business
to the Internet, whether that activity be e-commerce, inventory
control or otherwise. Cisco can draw on JRI's business management
expertise along with its corporate insider status, while the Japanese
company will be able to tap its partner's vast networking technology.

Communications adapters made by DIGI INTERNATIONAL INC. have been
sold by SUMISHO DATACOM INC. for the last seven years. However, the
rapid growth of ISPs, especially small and midsize ones, has opened a
major new market for the Minneapolis firm's products because Internet
POP servers incorporating remote access server adapters cost
significantly less per port than router-based solutions. Attempting
to exploit this fact, Sumisho Datacom and INTERNET PRO CORP., a Tokyo
communications consultant, have tied up to build Pentium-based PC
servers equipped with Digi DataFire RAS 24/48 remote access adapters
and running the RED HAT, INC. version of Linux. Their products are
scalable from 24 to 384 ports in a single server. Sumisho Datacom and
Internet Pro, which provides the hardware and system integration
services to configure the POPs as well as marketing and sales
support, training and maintenance, already have built 78 servers that
are operating in a high-traffic, 24 x 7 x 365 application.

New York's EXALINK, a supplier of platforms for the delivery of
Internet-based services to all types of wireless devices, named
NISSHO IWAI INFOCOM SYSTEMS CO., LTD. as its distributor. The
company's turnkey eXa.Flow WAP (wireless application protocol) router
is based on proprietary technology that supports WAP and other
IP-based protocols. Exalink notes, however, that unlike a WAP proxy,
protocol conversion is performed on the network layer with eXa.Flow.
According to it, that means improved performance and quality of
service as well as security policies that can be enforced in real
time. For wireless operators, these claims should come down to the
ability to provide advanced information and data services to their
subscribers fairly simply.

One of the pioneers in wireless data communications services and
technologies, GEOWORKS CORP., announced that TOSHIBA CORP. was the
first company to license its flexible user interface technology. The
Alameda, California firm's know-how is one key to making the recent
wireless application protocol the global standard for mobile
communications. Toshiba's license allows it to use Geowork's
technology in a series of handsets.

QUALCOMM INC., the chief promoter of the CDMA digital cellular
standard, and MATSUSHITA ELECTRONIC COMPONENTS CO., LTD. have
codeveloped a CDMA module that works with both the AMPS (advanced
mobile phone service) analog standard found in the United States and
the PCS digital format. Modules that enable CDMA-based cell phones to
pick up AMPS signals already exist, but the CRM3100 is the first
product that is compatible with all three standards. Moreover, the
partners say, the new module cuts power consumption by 20 percent,
which helps to roughly double handset standby time. Matsushita
Electronic Components will begin sampling the CRS3100, which will
cost around $460, in April.

In a pairing of heavyweights, the subsidiary of LUCENT
TECHNOLOGIES INC. and IBM JAPAN LTD. have launched Start Now for
Customer Service, an integrated solution for call centers that have
12 to 25 operators. The service marries IBM Japan's Start Now
customer relationship management software with Lucent's
computer-telephony integration expertise and its Definity ProLogix
PBX system, which is designed for small and midsize installations.
The partners are touting the ability of the hardware to efficiently
distribute calls coming in from customers. They also note that the
Definity ProLogix system is easily expandable, allowing it to meet
the requirements of growing call centers.

The subsidiary of facilities-based international carrier PACIFIC
GATEWAY EXCHANGE, INC., which received a Type I operating license at
the end of 1998, is marketing a low-cost international calling plan
to retail customers, primarily small and midsize businesses and
individuals. Subscribers to PGE Call can direct-dial 240 countries.
The anytime charge for a three-minute call to the United States is 61
cents, or about 60 percent below KDD CORP.'s daytime rate. However,
customers are subject to a minimum monthly charge of $9.20. PGE's low
fees are based on the premise that it can attract a large volume of
customers to PGE Call, which uses the Burlingame, California
company's private line in Japan to connect with the publicly switched
network there and in the United States, where all calls go regardless
of final destination. In time, PGE Call is expected to produce annual
revenues of $2.8 million. PGE, which has its own switch in Japan, got
its local start by offering global high-bandwidth data and Internet
services to carrier customers.

SEIKO EPSON CORP. has joined HITACHI CA-BLE, LTD. as a distributor
of the ViewStation line of group videoconferencing systems from
POLYCOM, INC., the number-one supplier of these collaborative
products (see Japan-U.S. Business
Report No. 364, January 2000, p. 31). Seiko Epson
will promote the ViewStation equipment, for which a Japanese
graphical user interface recently was introduced, with its own family
of LCD-based projectors. San Jose, California-headquar-tered Polycom
also will help Seiko Epson advance its New Meeting System concept.
This idea encompasses media-rich, multisite collaboration over the
Internet or through intranets by integrating IP-based
videoconferencing units like the ViewStation with meeting-en-hancing
peripherals as input devices and data projectors as output devices.

Just 15 months after IRIDIUM INC.'s global satellite phone and
paging service was launched, DDI CORP., the majority (50.5 percent)
owner of NIPPON IRIDIUM CORP., the operator of the Japanese part of
the network, decided to pull the plug on its troubled joint venture
with KYOCERA CORP. (10 percent) and other local investors. Although
DDI and Kyocera had indicated after MOTOROLA INC.-spearheaded Iridium
filed for Chapter 11 bankruptcy protection last August that they were
willing to pump money into the Washington, D.C.-based company, they
later changed their minds about Iridium's ultimate viability in light
of the technical changes that have swept the wireless communications
industry since the company was launched in 1991. That logically led
to the conclusion that Nippon Iridium, which had only 4,300
subscribers, had no future. Also shaping DDI's decision to liquidate
Nippon Iridium was the reality that it could not afford to go any
deeper into debt on the Iridium project than its $229.4 million
exposure given the fact that the company, Japan's number-three
communications carrier, is scheduled to merge in October of this year
with KDD CORP. and wireless services provider IDO CORP.

SPACE IMAGING, INC. of Thornton, Colorado added SHIKOKU
INFORMATION AND TELECOMMUNICATION NETWORK CO., INC. as a distributor
of the extremely high-resolution images of the earth captured by its
Ikonos satellite. The Kagawa prefecture-based company will launch its
marketing activities in June, targeting providers of ITS (intelligent
transportation system) and GIS (geographical information system)
applications, among others. MITSUBISHI CORP., which was instrumental
in the formation of Space Imaging's subsidiary, also has rights to
sell the detailed imagery from the Ikonos satellite.

TEXTILES AND APPAREL

Sooner than anticipated, OUTLAST TECHNOLOGIES, INC. arranged to
have foam material based on its temperature-regulating technology
manufactured in Japan. The Boulder, Colorado developer and marketer
gave major foam producer INOAC CORP. exclusive rights for that
application. More commonly, OUTLAST technology, which, when applied
to material, absorbs, stores and releases heat as necessary, is
incorporated in fibers and fabrics for outerwear, work clothing,
footwear and the like. At the end of 1999, Outlast Technologies gave
ITOCHU CORP. sole rights to import and distribute OUTLAST fibers,
fabrics and foam (see Japan-U.S.
Business Report No. 364, January 2000, p. 32).

The company that bills itself as the owner of the number-one brand
of so-called dynamic climate control materials also thinks that Japan
is fertile ground for its technology. FRISBY TECHNOLOGIES, INC.
signed a product development and test-marketing agreement with
BRIDGESTONE CORP. covering its ComforTemp DCC technology. On
successful completion of a six-month trial period, the big tire
manufacturer, which also is a leading maker of foam materials for
consumer goods products as well as for automotive applications, will
have exclusive rights to produce, distribute and sell ComforTemp
materials for home furnishing products marketed in Japan. Elsewhere
in Asia, Bridgestone will have nonexclusive rights to deliver
materials for this end use incorporating Frisby Technologies'
know-how. The pending license with the Winston-Salem, North Carolina
company also will allow Bridgestone to supply ComforTemp materials to
Japan's automotive industry for products sold worldwide.

TIMBERLAND CO., the marketer of a premium but popular line of
footwear, apparel and accessories geared toward the outdoors,
reacquired distribution rights to its products in Japan and other
Asian countries from INCHCAPE PLC. The Stratham, New Hampshire
company immediately formed a subsidiary in Japan to manage marketing
of its line there. Inchcape took over distribution of Timberland
products from another company in 1995.

TRANSPORTATION EQUIPMENT

Having forged potentially powerful equity and technical ties with
FUJI HEAVY INDUSTRIES, LTD., ISUZU MOTORS LTD. and SUZUKI MOTOR CORP.
in its drive to expand sales in Japan and the rest of Asia (see
Japan-U.S. Business Report
No. 364, January 2000, p. 32), GENERAL MOTORS CORP. now
is exploring other ways to apply its partnership strategy to
achievement of this goal. For instance, the e-GM e-commerce business
unit of the world's top automotive manufacturer has approached TOYOTA
MOTOR CORP. about using its Japanese-language Gazoo Web site to
provide information to Japanese customers about GM products, such as
prices and dealer locations. GM's subsidiary has its own
Japanese-language Web site, but it has not been very successful in
generating sales leads. Gazoo, in contrast, is the most frequently
accessed virtual vehicle showroom in Japan. At first glance, GM might
appear presumptuous in asking Toyota to share its Web site. However,
the two automotive giants are co-owners of 16-year-old NEW UNITED
MOTOR MANUFACTURING INC. in Fremont, California, and they currently
have an extensive R&D collaboration involving new vehicle
technologies.

Both of the American-associated on-line vehicle-buying services
now have MITSUBISHI MOTORS CORP. as a participant. Japan's
number-four automotive maker was one of eight car and truck companies
linked with CARPOINT JAPAN K.K., a MICROSOFT CORP. affiliate, on its
launch last year (see
Japan-U.S. Business Report
No. 362, November 1999, p. 26). Requests for
information on Mitsubishi Motors products received by CarPoint are
forwarded to 63 of the company's dealers in Tokyo as well as in
surrounding Kanagawa, Chiba and Saitama prefectures. Now, MMC has
signed on with AUTOBYTEL.COM INC.'s Japanese unit. During a test
period that will last through May, 91 Mitsubishi Motors dealers in
the Tokyo metropolitan area as well as in Aichi, Hyogo, Kyoto and
Osaka prefectures will handle leads generated by Autobytel, whose
computer will be linked with the automaker's OnlineCounter system.
The number of participating dealers could be expanded if the
Autobytel test is successful.

In forecasting first-year sales of its new Focus subcompact car at
a robust 5,000 vehicles, FORD MOTOR CO. obviously believes that its
latest "world car" will achieve the same relative success in Japan
that it has enjoyed in Europe and especially in the United States
since introduction last fall. The 1.6-liter Focus wagon, which went
on sale at the beginning of March, incorporates a number of
safety-oriented features. It has a suggested price of $18,300 or so.

The aircraft engine servicing business in Japan is on the verge of
being reshaped. Late last year, GENERAL ELECTRIC CO., the world's top
manufacturer of jet engines, initiated tie-up talks with ALL NIPPON
AIRWAYS CO., LTD. and ISHIKAWAJIMA-HARIMA HEAVY INDUSTRIES CO., LTD.
(see Japan- U.S. Business Report No. 363, December 1999,
p. 39). Now, GE's chief rival, the Pratt & Whitney unit of
UNITED TECHNOLOGIES CORP., has agreed to partner with JAPAN AIRLINES
CO., LTD. on aircraft engine maintenance. Under the deal, the East
Hartford, Connecticut-head-quartered company will acquire part of
JAL's interest in JAPAN TURBINE TECHNOLOGIES CO., LTD. and all of
NIPPON STEEL CORP.'s 49 percent stake for an undisclosed price. On
completion, P&W will own 66.6 percent of Chiba prefecture-based
Japan Turbine Technologies, which was formed in April 1988, and JAL
the balance. Like the proposed GE consortium, the P&W-led company
intends to seek maintenance work from other airlines in addition to
being responsible for the servicing of JAL's fleet of planes, which
are powered predominantly by P&W engines.

Business-jet aircraft manufacturer GULFSTREAM AIRCRAFT CORP. has
delivered a fifth Gulfstream IV- MPA to the Air Self-Defense Force.
The multimission plane, designated the U-4 in Japan, is equipped with
a versatile interior that can be converted within an hour for
passenger, high-priority cargo or medical- evacua-tion purposes. It
also has a special 5-foot x 6-foot cargo door to facilitate
medical-evacuation needs. The Gulfstream IV-MPA has a
4,220-nautical-mile range and can cruise at altitudes of up to 45,000
feet. Savannah, Georgia-headquartered Gulfstream is owned by GENERAL
DYNAMICS CORP.

MISCELLANEOUS

In the second expansion of their relationship, LIGHTPATH
TECHNOLOGIES, INC., a manufacturer of optical products for the
communications component industry, gave HIKARI GLASS CO., LTD. the
right to produce products based on the Albuquerque, New Mexico firm's
proprietary technologies, including its automated laser polishing and
laser fusion processes. Hikari Glass' Asian marketing territory also
was extended to include the People's Republic of China. The two
companies tied up in March 1997 when LightPath tapped Hikari Glass, a
maker of high-end optical lenses and prisms, to supply raw materials
for its Gradium optical glass process. Then, in May 1998, the U.S.
business gave the NIKON CORP. affiliate the right to distribute in
Japan as well as in Singapore, South Korea and Taiwan its Gradium
glass products with their unique light-bending properties.

MOTOROLA INC. has tied up with a second Japanese manufacturer of
business forms and labels as it continues to promote its BiStatix RF
identification technology as a replacement for bar codes. Last fall,
Motorola and TOPPAN FORMS CO., LTD. agreed to codevelop and comarket
"smart" label solutions incorporating the breakthrough BiStatix RFID
technology (see Japan-U.S.
Business Report No. 361, October 1999, p. 36). Its
new codevelopment and comarketing partner is DAI NIPPON PRINTING CO.,
LTD., the world's largest printer. The expected results of both
alliances are paper-based products containing information stored in
chips that can be read and modified through a wireless interface.
Tags based on BiStatix technology are scheduled to become
commercially available from both companies sometime this year.
Motorola claims several advantages for its smart labels over earlier
generations of products enabled by RFID technology. Near the top of
the list is cost. At less than an estimated 50 cents each, BiStatix
labels will be half the price of other RFID labels. Moreover,
BiStatix smart labels are readable even if they are folded, crumpled
or ripped, and they can be printed on paper and other nonconductive
surfaces using existing printing processes.

The golf craze in Japan might be over, but as the world's
second-largest golf market after the United States, that country
still commands the attention of U.S. equipment manufacturers. Premium
golf club supplier ADAMS GOLF CO., for one, has established a wholly
owned subsidiary to obtain direct feedback on its R&D efforts and
to achieve greater control over its marketing message and
distribution channels. The Plano, Texas company is the maker of the
Tight Lies family of fairway woods, the SC Series Spin Control
drivers and the Faldo Series Wedges.

With sales in FY 1999 predicted to be 29 percent below the
year-earlier total, ACUSHNET CO.'s subsidiary is restructuring its
golf club business in the hope of getting back on a growth track. Its
Cobra brand of clubs is targeted at the midlevel golfer. He or she
represents roughly 80 percent of the player population in Japan, but
this large group is made up mostly of middle-age and older people. To
better accommodate their needs, New Bedford,
Massachusetts-headquartered Acushnet has brought out a new line of
clubs under the CX1 brand. Moreover, next year, it will introduce
irons and woods designed and manufactured specifically for the
typical Japanese player. In the meantime, Acushnet's marketing unit
is assigning sales people to four regions of the country in order to
develop new distribution channels.

The fallout from the restructuring of NISSAN MOTOR CO., LTD.
extends even to its advertising agencies. Japan's number-two
automotive maker spends some $917.4 million a year on worldwide
advertising, but executives of new owner RENAULT S.A. have complained
that those outlays are not buying the brand image that the company
needs. In response, HAKUHODO INC., which generates roughly $275.2
million in Nissan billings annually, is in talks with OMNICOM GROUP
INC., the world's top ad agency and one of the companies that does ad
work for the car and truck builder overseas, about tying up in order
to implement the global brand strategy that Nissan wants. The two
reportedly are weighing the formation of co-owned but separate units
in Japan, the United States and Europe to roll out integrated Nissan
campaigns in those regions.

DISPLAYSEARCH, an Austin, Texas market research and consulting
firm that specializes in the fast- expanding flat-panel display
business, has opened an office in Japan, the source of much of the
activity in this field. With an in-country presence, DisplaySearch
says, it will be positioned to provide even more detailed, accurate
and insightful Japan market intelligence to its 350 clients.

The rapid growth of e-commerce and other Internet-based activities
in Japan is starting to attract American companies that can collect
market information and analyze it for clients. One of those firms is
HARRIS INTERACTIVE, the sponsor of the well-known Harris Poll. The
Rochester, New York company formed a Tokyo subsidiary with minority
(20 percent) partner M&A CREATE INC., a marketing consulting
firm, to undertake Internet-based market research projects for
companies there. As elsewhere, Harris Interactive will perform this
work by using a data base of on-line panelists, expanded to include
Japanese individuals, and its proprietary technology. The joint
venture also will conduct research in the United States and in other
countries for Japanese clients.

As of April 1, the Tokyo subsidiary of KPMG LLP will have 120
people on staff versus 70 at present to advise clients in the broad
field of e-business. The expanded personnel resources will result
from the merger of the IT division of KPMG CONSULTING LLC's
subsidiary with KPMG GLOBAL SOLUTION K.K. The reorganized company
expects much of its work to come from helping Japanese companies make
the transition to e-commerce, although its expertise extends to
information systems installation and application service provider
projects.

Companies interested in on-line advertising and Web marketing in
Japan have a new source of help. MEDIA METRIX, INC., the pioneer of
Internet and digital media measurement, opened a wholly owned
subsidiary in Tokyo. The organization, its New York City parent says,
will provide comprehensive, real-time meter-based Internet and
digital media measurement products and services tailored where
necessary to the needs of Japanese clients and the Japanese market.
Media Metrix states that its key advantage in breaking into the local
market is that it already has developed, tested and produced data
utilizing its kanji meter. Consequently, its subsidiary can ensure
the highest-quality data and the most representative sample.

LYRA RESEARCH, INC., a provider of publications, market
information and custom research services involving the imaging
industry, appointed consumer market researcher JDS CO., LTD. as its
exclusive sales and marketing representative. The Newtonville,
Massachusetts firm has more than 2,000 customers around the world for
such publications as The Hard Copy Observer, which tracks the printer
industry. Presumably, a significant number of subscribers are in
Japan, given the international standing of that country's
manufacturers of imaging equipment.

Outsourcing still is in its infancy in Japan despite a greater
willingness among big companies to hand over to outsiders
responsibility for their computer systems. Despite this reality, the
subsidiary of PRICEWATER-HOUSECOOPERS LLP has set up an operation to
provide administrative support to clients in the areas of finance,
accounting and personnel. The thrust of this initiative is for
companies to transfer their administrative personnel to PWC, which
will retrain them so that they can work for other clients as well as
for their original employer. The big accounting and consulting firm
hopes to arrange outsourcing deals with three or four firms in the
first year and to add between 200 and 300 employees from each to its
personnel roster.